Insurers on top in spats with customers about flood experts

Many insurance brands, including Suncorp’s flagship self-named product, do not allow customers to opt out of flood cover, thereby avoiding disputes about where water damage came from.

Mr Johnston, IAG chief executive Nick Hawkins and Youi chief executive Nathaniel Simpson also issued mea culpas for problems or shortfalls that struck some customers after damaging events in 2022. While the overwhelming majority of claims had been settled, tens of thousands of claims had still been open more than a year after the disaster, the inquiry heard.

Builders taking on too much

Mr Gee referred to a couple whose Suncorp-insured home in the rural town of Molong, 300 kilometres west of Sydney, had been inundated in November 2022 and 12 months later were still living in a caravan. There had been a “litany of delays”, experts not turning up and underquoting of costs, Mr Gee said, arguing the insurer only elevated its reaction after political heat.

Mr Johnston, while saying mitigating circumstances existed such as labour shortages, conceded Suncorp could have done better and that he was “embarrassed”.

Suncorp’s head of consumer insurance Lisa Harrison said customer complaints included dissatisfaction with builders’ scope of works to repair or rebuild homes, saying some builders probably had too many cases on their hands and tried to get through their allotment in a couple of days.

“That might have meant they didn’t fully explain something to the customer and therefore the customer wasn’t aware of why that work was being done or … wasn’t being done. In some instances, they also missed pieces of work, which is why another builder might come in and say it is X dollars more,” she said.

Ms Harrison said Suncorp had since made builders reduce the work in any given day, to talk more to customers and improve accuracy, and this was being implemented after recent floods and storms in Cairns and the Gold Coast.

Insurers including Suncorp and IAG also reinforced that bad planning decisions had led to homes being built in areas prone to disaster, and this was still occurring, or that homes were being rebuilt in a way that set themselves up for disaster again.

Insurance Council of Australia chief executive Andrew Hall cited examples of homes being rebuilt in Townsville which was flooded in 2019. State government money was not provided to raise homes there.

“Those homes should not be getting put back there on [a] slab. But they are and they will flood again,” he said.

Youi’s Mr Simpson said it was worth exploring whether to detail flood risk on property titles, saying property listings in Europe had to detail their energy-efficiency ratings.

Australian Securities and Investments Commissioner Alan Kirkland last Friday told the inquiry that shortfalls in the industry’s response to the 2022 disasters “cannot be attributed solely to the extreme nature of those events”.