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Tuesday, March 20, 2012

Insurance and the Queensland floods

The final report of the Queensland Floods Commission of Inquiry was released on the 16th of March. At just over 650 pages it provides extensive cover of the events and consequences of last year's floods.

Significant insurance issues arose during the Inquiry, which covered them in some detail in Chapter 12 Performance of private insurers, including:
12.5.3 Timeliness of internal dispute resolution
12.6 Communication with policy-holders. In this area the submissions to the Commission raised a number of issues about communication. Complaints included the following:
  • Insurers had dissuaded policy-holders from making claims.
  • When they telephoned their insurers, policy-holders spent long periods of time on hold or could not get through.
  • Insurers had not provided regular information about the progress of claims and had not returned policyholders’ phone calls.
  • Insurers had told policy-holders, incorrectly, that their claims would be covered when they called to lodge claims.
  • Insurers had not provided a single point of contact: policy-holders had to deal with different staff at different times.
  • Insurers had, in some instances, treated policy-holders less than professionally or compassionately. Insensitive or inappropriate remarks had been made to some policy-holders.
12.6.1 Multiple case managers
12.7.4 CGU’s desktop assessment process
12.8 Information to policy-holders whose claims were denied
12.9 Internal dispute resolution
The Commission's recommendations regarding insurance are reproduced below. Neither New Zealand private insurers nor EQC are close to following the Commission's recommended practices and some action is needed to push them in the direction of this better form of practice.
12.1 When a policy-holder makes a claim, the insurer should ascertain the policy-holder’s preferred method of contact and ensure that it is used (with other modes of communication if necessary) to keep the policyholder informed about the progress of the claim. However, important decisions regarding the claim – for example, determinations about the outcome of the claim and settlement sums – should always be confirmed in writing.
12.2 Insurers should review their existing systems and processes and implement any improvements necessary to ensure that accurate and complete records of conversations with policy-holders are made.
12.3 Letters notifying policy-holders that their claims have been denied should, at a minimum, state the information upon which the insurer has relied in making the decision. These letters should also advise policy-holders that copies of the information will be made available upon request (in accordance with clause 3.4.3 of the General Insurance Code of Practice) and indicate how policy-holders can make a request.
12.4 The Insurance Council of Australia should consider an amendment to Part 3 of the code which requires insurers to notify policy-holders of the information on which they relied in assessing claims.
12.5 The Insurance Council of Australia should amend clause 3.4.3 of the General Insurance Code of Practice so that it requires insurers to inform policy-holders of their right to request a review of an insurer’s decision to refuse to provide access to information on which it relied in assessing claims.

The Report, either a single PDF file or individual chapters and sections, can be downloaded from here.

As an aside, one of the worst performing insurance companies was CGU, part of IAG (Insurance Australia Group) - see Chapter 12, e.g. pages 287, 288, 308, 310. As well as property insurance CGU is a player in the provision of workers compensation in Australia. IAG NZ (a wholly owned subsidiary of IAG Australia) has links to New Zealand through State Insurance, NZI, Lantern Insurance, and the non-earthquake side of AMI. Names to watch for the future?

A particularly interesting account is the interaction between CGU and one of its customers: Sallyanne Doyle. Over a number of pages the Commission recounts Ms Doyle's battle with CGU, its dubious methods, and inadequate staff (especially the CEO). Gripping stuff, especially for those who have had a few encounters with EQC. The main bit starts on page 315 but the important background starts a few pages earlier.
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