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Domestic violence: spotlight falls on insurers

Family violence is a major problem, with former Australian of the year Rosie Batty describing it as an “epidemic”.

Concrete figures are hard to come by, but Australian Bureau of Statistics surveys suggest at least one in six women, and one in 20 men, have been subjected to violence by a partner.

Authorities have responded, with a royal commission tabling its final report last year and the Victorian budget unveiling a $1.9 billion package to tackle the scourge just last week.

But until now, one element has been broadly ignored: insurance.

Imagine you have separated from an abusive partner, but he or she returns to burn down your jointly owned, and jointly insured, property.

Your claim could be denied because the damage was caused maliciously by a co-insured.

This is one of many examples and case studies outlined in a paper drawn up by the recently formed Economic Abuse Reference Group, a coalition of eight Victorian organisations.

Claims could also be rejected on the basis the victim invited the perpetrator into their house, even if the perpetrator is not a joint owner or co-insured.

Valid claims could be paid to an abusive partner alone if insurance is in their name only, and a claim may be rejected due to non-disclosure by one joint insured, even if the other was unaware of the matter.

Insurance could be maliciously cancelled, and a victim may not be able to access information about insurance if it is in the perpetrator’s name.

The problem of gruelling insurance investigations rears its head again – with family violence survivors particularly vulnerable to aggressive questioning.

Lawyer Denis Nelthorpe, whose group WEstjustice is part of the Economic Abuse Reference Group, told action is badly needed.

“A number of quite extreme cases have come to our attention,” he says.

Professor Nelthorpe says a legal precedent – the 1989 case Advance (NSW) Insurance Agencies Pty Ltd v Matthews – determines that the actions of one co-insured must affect both insured parties.

“Matthews says it’s bad luck in these circumstances,” he says. “Where one co-insured is at fault, the other co-insured has to bear the consequences. This is not the case in the UK or New Zealand. Australian law is out of step with other countries, and outdated.”

Professor Nelthorpe is calling on the insurance industry to tackle the issue in two ways.

First, he says it needs to focus on training staff to recognise and deal with issues of family violence, both internally and externally.

Second, procedures must be developed to make sure family violence cases are dealt with appropriately.

“They need to sit down with the community sector and family violence organisations and come up with solutions,” he says. “This could involve a public acknowledgement that Matthews is outdated. It could also involve policy wordings, and definitions.

“The industry has been a bit shocked by the nature of some of these issues and there are significant challenges.

“It is a complex issue and we are going to have to sit down and work through it together.”

Professor Nelthorpe believes the problems have been aggravated by “online and telephone underwriting”, which have made it easier for one person to arrange or cancel a policy on a jointly owned property.

“This is raising issues that the industry probably hasn’t had to deal with in the past,” he says.

Philippa Heir, Senior Solicitor at Consumer Action Law Centre, which is also involved with EARG, told policy exclusions leave family violence survivors exposed.

“Survivors have a lot to deal with in addition to the actual violence involved,” she says.

“This can include dealing with banks, utilities – and insurers.”

She believes insurance investigations can be particularly distressing.

“Sometimes survivors need to retell the story many times over, and that can be quite traumatic,” she says.

Insurance Council of Australia (ICA) spokesman Campbell Fuller told the issues raised by the Economic Abuse Reference Group “are multifaceted, and require a considered response from the general insurance industry”.

He says family violence will be made “a priority issue” for consideration in the current review of the General Insurance Code of Practice.

ICA is also “examining how other sectors are addressing these problems, with a view to seeing whether similar measures could be adopted by insurers”.

Clearly ICA is taking the issue seriously – and so it should if it wants to preserve the industry’s socially responsible image.