Ombudsman increases farm flood payout
Farm insurer Achmea has failed to convince the industry ombudsman that a cash settlement for flood damage is fair, because it did not hire experts to assess the loss.
Achmea must settle part of the claim for the sum insured, increase its offer on a building claim and pay compensation for non-financial loss, the Australian Financial Complaints Authority has ruled.
In March 2022, the insurer accepted claims for damage to assets including residential property, agricultural buildings, machinery and vehicles.
The insureds held a farm pack policy that offered different levels of coverage based on the items insured.
Achmea offered a cash settlement of $126,086 for one building, based on a scope of works prepared by its builder.
But the insureds complained to AFCA, arguing that because the insurer was not completing the repairs and did not engage qualified experts to investigate the damage, it should pay the full sum insured.
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The building damage was assessed in May 2022 by two experts under a national disaster management program. They were not engaged by the insureds or the insurer.
The experts said there was pre-existing structural damage and the flood compounded this.
But the AFCA panel is not convinced the experts’ reports contained enough information to support their findings or delineate between flood damage and previous issues.
It finds Achmea did not engage a suitably qualified expert to support its statement of works and cash settlement offer.
AFCA has also ordered Achmea to increase its offer for a residential property.
The insurer offered $404,506 for repairs, but AFCA says, given the size and complexity of the work, it must include a 30% uplift for contingencies.
The insurer must also cover additional items and expenses including cleaning and claim preparation costs.
AFCA accepts it is a complicated case, but the panel is not persuaded Achmea met industry codes and standards in handling the claim and has awarded both complainants the maximum compensation for non-financial loss, amounting to $12,600.
Read the ruling here.