INSURANCE companies will form a standard definition of flood and write policies in clearer English following outcries from consumer groups in the wake of the Queensland floods.
Federal Assistant Treasurer Bill Shorten met with the Insurance Council of Australia yesterday to discuss the establishment of the flood definition after the revelation about half of all flood affected homeowners discovered they did not have flood insurance.
“When tragedy strikes, as it has with the floods, many people are left scrambling to wonder if they are adequately insured for the flood or event that has just occurred,” Mr Shorten said.
“It is not acceptable in the future to not have standard definitions... so people know what they’ve bought and what they haven’t bought.”
While flooded homeowners were dealing with the heartbreak the devastating floods delivered, many suffered the second wave of pain when they discovered their insurance policy covered them in the event of a flash flood or flooding resulting from a storm, but not flooding from a river.
It is that confusion between what constitutes a flood that has brought consumer groups out in force with renewed calls for simpler language used in insurance policies.
However, Mr Shorten warned the process of applying a standard definition would “not be without its complexities”.
“Giving a standard definition is not going to be the... silver bullet for sorting out all costs arising out of the floods,” he said.
The move follows the announcement by the ICA it would establish an expert panel of hydrologists to speed up the claims process.
As at the end of January, the ICA had received 38,460 claims with an estimated value in excess of $1.51 billion.
“A limited supply of hydrologists in Australia has the potential to slow down claims processing following the Queensland floods, potentially causing a direct impact on flood victims seeking to make a claim,” ICA chief executive Rob Whelan said.
“The independent Hydrologists Panel engaged by the ICA will prepare plain English reports describing the causes, nature and severity of flooding that has occurred in Queensland.”
But the reports will not bind insurance companies determining if they will pay claims, he said.
“A limited supply of hydrologists in Australia has the potential to slow down claims...” ICA chief executive Rob Whelan
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