Insurance companies warned against using floods as excuse

INSURANCE companies have been asked to "clean up their act" and not use recent floods to increase premiums.

Chief executive of consumer advocate group Choice Alan Kirkland said new research found while many consumers were hit with insurance premium hikes, insurers were not being fair or transparent.

He said nearly 60% of 1435 people surveyed by Choice noticed an increase on recent bills, attributed to floods.

"One minute major insurers have been telling consumers the price rises are necessary due to the large payouts from the 2011 floods, while the next they are saying the rises are because a property has been specifically checked out and identified as being in a high-risk flood zone," he said.

The research showed major insurers were using inconsistent techniques to assess flood risk, including Google Maps and "secret" assessments that they would not reveal to homeowners, local government or the National Flood Risk Information Portal.

"There are reports of insurers purposely pricing themselves out of postcodes that are prone to flooding, even if there are homes that are on hills or not near the flood zone," Mr Kirkland said.

The rise in premium prices also saw a 35% increase in general insurance disputes lodged with the Financial Ombudsman Service in 2011-2012.

"Our major concern is that some consumers are forgoing household insurance altogether because they simply cannot afford the new premiums," says Mr Kirkland.

"After a will and testament, home and contents insurance is one of the most important documents in many people's lives - insurers have a responsibility to play fair and also ensure that this vital consumer product remains affordable for all Australians."


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