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Flood inquiry: Allianz says it can’t stand alone on cover choice 

Allianz Australia is reviewing whether it should keep offering flood choice for new customers while supporting existing policyholders under the current model, MD Richard Feledy has told the parliamentary inquiry into insurers’ responses to the 2022 catastrophes.

Mr Feledy said Allianz cannot afford to become the only insurer that allows people to be insured for other risks while specifically excluding flood, which would see it being adversely selected.

“We have really struggled with how we find the right solution, to balance obviously the commercial interests and standing by our customers,” he told the committee.

“While the review is not complete, in the spirit of transparency, I can tell you that we’re looking at a solution that absolutely stands by our existing customers, but we really need to look at whether or not we can continue with a flood choice model for new business.”

Mr Feledy said ultimately such arrangements across the industry would lead to a larger segment of people who do not have access to affordable insurance.

The House of Representatives Standing Committee on Economics is examining insurers’ responses to the devastating series of floods two years ago, including the record-breaking catastrophe affecting Queensland and northern NSW.

Lismore region MP Kevin Hogan, one of four members from flood-affected areas added to the committee for the inquiry, said it is important people can still gain insurance for other issues such as fire and burglary.

Independent Andrew Gee said a resident in Eugowra, in his electorate, was quoted about $22,000 a year for cover including flood and $2000 without.

Mr Gee said hydrologists’ reports paid for by insurers to determine whether water came from riverine flooding or stormwater contained no declarations of independence, as is required for expert reports in legal settings, and policyholders could not afford to pay for second opinions.

Mr Feledy said: “They are expert reports, no different to an engineer’s report or a bacterial report, reports that we rely on to rebuild and repair homes, but they are reports we need to rely on for the determination of what the damage was.

“They are not employees of Allianz, they are not incentivised by Allianz.”  

Allianz told the committee it is transitioning to a case management model in handling claims and away from a task-based model, reducing the need for customers to repeat themselves and improving communication through the process.

RACQ told the committee on Friday it has made changes including having less reliance on external assessors and introducing greater quality assurance and governance over panel builders, contractors and third parties.

“Since the floods, we have minimised our reliance on automated messaging to communicate to our members,” Group CEO David Carter said. “Members who have been impacted by weather events this summer are getting more tailored and useful updates and advice from RACQ.”

The insurer says more training is needed to improve responses to policyholders experiencing “acute vulnerability” after the trauma of major natural catastrophes, which is separate to identifying underlying existing vulnerabilities.

Responding effectively includes showing empathy in conversations and ensuring interactions don’t come across as mechanistic, as people are dealing with devastating events, Mr Carter told the committee.

“We can do more and we can do better to respond to people who are under duress,” he said.

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