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NIBA outlines broker concerns after record flood claims 

The National Insurance Brokers Association (NIBA) says members have expressed a number of concerns over handling of record 2022 flood claims by insurers, as it calls for a “standardised approach” to be introduced industry wide. 

NIBA says while insurers’ responses to the floods have been largely positive, members raised concerns over delays in resolving claims, the handling of claims made by vulnerable clients, and the availability and affordability of insurance. 

Brokers pointed to a lack of flexibility within the claims-handling process that has contributed to delays, NIBA says, including an absence of express payment methods, unnecessary requests for hydrology reports, a lack of communication channels available to impacted policyholders immediately following events, and delays in obtaining builder quotations due to a refusal to allow policyholders to source quotes for required work.  

"As the frequency and severity of natural disasters increase due to climate change, it is vital that we take the opportunity to learn from these events to improve outcomes for policyholders impacted by natural disasters,” NIBA CEO Phil Kewin says in a submission to the parliamentary inquiry into insurers’ responses to last year's major floods. 

“The concerns raised by brokers highlight the need for a standardised approach when responding to natural disasters, including an industry approach to liaising with broker clients,” he said.  

NIBA, which represents around 450 member firms and 9000 individual brokers, is encouraging all insurers to engage with consumer groups and the broader general insurance industry to develop a consistent industry-wide approach.  

The submission notes a large number of staff had to be employed at short notice, and many "lacked essential experience” in claims handling.  

“This has resulted in significant delays, with one broker providing an example of a client who waited eight months for an insurer to decline their claim, resulting in an increase in internal dispute resolution and AFCA complaints,” it said. 

Mr Kewin also says uninsurability has potential to exacerbate inequality, and this is already occurring, with home insurance premiums in parts of Northern Australia almost double that of the rest of Australia, and a quarter of households in WA’s Port Hedland paying premiums more than four times higher than the Australian average.  

The submission says one insurer quoted $27,000 to provide flood coverage on a sum insured of around $500,000. Removing flood, rainwater runoff, and storm surge cover decreased the premium to just $2226. 

Mr Kewin says members have also expressed concern about the lack of a consistent industry-wide approach to vulnerable clients, with some insurer policies having “no practical impact on the handling of the claim and others failing to meet their obligations under the Code despite being notified that the client is experiencing vulnerability”.  

See the submission here.