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Wednesday, 14 March 2012
Page: 2993


WYATT ROY (Longman) (17:00): When the floodwaters rose in my electorate in January last year there was an overall sense of fear, uncertainty and panic in my community. The waters came up so quickly that in some circumstances there was very little time for evacuations or preparations. But for all of the fear and all the uncertainty surrounding the floods themselves it was the aftermath that has struck at the hearts of thousands of Queenslanders, including many living in my community. After the waters subsided, unmistakable genuine dread, panic and frustration set in. In the days following the tragic Queensland floods of 2011 my office was inundated with calls from concerned local residents who were unsure whether they were covered by insurance and what they needed to do to find out the truth from their insurance providers, who at the time seemed to be less than forthcoming with the relevant information.

For these people, who had lost all of their worldly possessions, the fear and uncertainty as they waited for judgment on whether they were covered by their insurance was paralysing. In some cases this fear was justified. Many who had thought that they were covered by their insurance simply were not and were instead left to the mercy of the community to come to their assistance. It is for these families that we are here today to debate the Insurance Contracts Amendment Bill 2011.

This bill introduces two measures: a standard definition of 'flood' for insurance contracts and a requirement of insurance providers to provide key facts sheets to consumers taking out home building and contents insurance policies. In January 2011 many individuals were left without insurance coverage when they had mistakenly assumed they would be covered—all of which could be put down to mistaken understandings facilitated by the use of compound, complicated phrases which, without experience in the insurance industry, seemed almost impossible to decipher the true meaning and extent of coverage for flood incidents.

The confusion experienced by people in my community was not an isolated incident. It was not isolated to a particular insurance provider or just to our community. In fact, individuals across the country were confused. The devastating floods that this country faced demonstrated that the existing regulations governing insurance contracts were insufficient and inadequate for the people of this country.

The disturbing and disappointing reality is that the lack of a common definition for 'flood' was first highlighted as an issue back in 2007. Yet it has taken nearly five more years and a series of devastating floods across the country for those across the chamber to give this issue the importance it deserves and to start to make some progress towards a solution. Even the insurance industry itself, which was pushing for a standard definition, was unable to encourage this Labor government to pursue this issue with the stamina and commitment it deserved. No, this government's resolve wavered at the first hurdle when initial plans to introduce a common definition were scuttled by the ACCC.

Those on the opposite side of the House let this issue lay dormant until they received the resounding wake-up call of the 2011 floods. It was not until the wake-up call of last year's floods, and at the insistence of this side of the House, that this Labor government finally took action on this issue. In March the National Disaster Insurance Review was commissioned and in April consultations began. But, when the review's recommendations were received by the government in September, instead of taking immediate action on the recommendations, the powers that be held back the release of the review until November, thereby preventing any genuine action before the start of another Australian wet season and the floods that we have again seen across this country.

More disappointing still was the government's decision to defer decisions on 39 of the total of 47 recommendations of the report. It would seem that the only tangible, solid action that this government was willing to take was to commit to still further reviews. In marked contrast to those opposite, the coalition has always stood for action and has consistently sought to achieve a standard, universal definition of 'flood' to be utilised by all insurance providers in their contracts. We on this side of the House support the recommendation of the natural disaster insurance review, that the government should introduce a standard definition of 'flood' in order to avoid any consumer confusion surrounding flood coverage within insurance policies. The final report recommends that the definition of 'flood' be:

... the covering of normal dry land by water that has escaped or been released from the normal confines of:

(a) any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or

(b) any reservoir, canal or dam.

We on this side of the House support this standard definition for floods across the entire country and across every insurance company.

After the devastating floods of last year, I held extensive community consultation both online and in person with stakeholders and affected locals in my community. This consultation revealed the desperate need to address the lack of a standard definition of 'flood'. One of the many people from my community that I spoke to told me, and I quote verbatim:

The government needs to look into the wording of what a flood et cetera are in insurance companies as most people are only now finding out what their policy really means to them.

This was one of the many desperate cries for help from my community. Yet another was from a local resident of Mary Street, Caboolture—one of the worst affected local streets during the flood. Despite having been insured with the same company for 26 years and being under the impression that he was covered for flood, this gentleman's insurance claim after the flood was declined. The ambiguity surrounding whether the flood was a flash-flooding event or a riverine-rising event means that he sadly discovered that he would not be covered for the damage to his home. One can only imagine the desperation that this gentleman and his wife felt upon receiving this news. I can only imagine that this surprising and devastating news would not have been needed to be delivered if this Labor government had been more proactive in making changes to insurance contract laws when concerns were first raised in 2007.

It was the compelling testimonials and broader community feedback that were the motivation for me to make a submission to the commission of inquiry into the Queensland floods. In my response to the commission of inquiry, and based on the extensive feedback that I received from the community during the community consultation that I conducted in my electorate, I recommended that a standard definition of 'flood' be developed by the Insurance Council of Australia and applied by all insurance providers and that policyholders be provided with information about their level of cover in plain English.

My community has experienced firsthand the importance of a single universal definition for the word 'flood' and the confusion experienced due to the many and varied definitions of flood in insurance contracts. The outcome of the confusing jargon so often used in insurance contracts has in some instances shattered the dreams of families who have lost everything only to find that their insurance did not cover their losses. For those who were left without insurance coverage, my local community did an excellent job, and I thank the countless individuals who did a wonderful job in facilitating delivery of emergency goods and assistance to the many families in my region.

This standard universal definition will provide clarity to the many people in my electorate when planning their future insurance. Those residents on Dale Street in Burpengary will have greater certainty when taking out insurance policies. While this may not be a solution to the poor planning decisions that have gone before, the regulation of a standard definition of 'flood', will allow them to make informed choices about whether they take out flood coverage. Sadly, for some in my community these measures have come too late. But unless a standard definition of 'flood' is created and used now, many more will suffer the same fate as those in my community did in January last year.

The second measure that this bill deals with is that of the key facts sheet. It is the intention that this bill will require all insurance companies to provide consumers with a key facts sheet about their policy. This is a commonsense measure that will enable consumers to effectively compare apples with apples when it comes to their insurance and give them every opportunity to make an educated and informed decision regarding their home and contents insurance. In an industry that has been fraught with confusion and ambiguity, evidence of which has been seen in the way the flood related claims have played out over the past 12 months, measures to increase transparency are important, if not essential. Unfortunately, the draft requirements for the key facts sheets have not yet been released. However, the minister has indicated that they will be put through rigorous consumer testing before the final regulations are decided upon. It is absolutely critical that this process of consumer testing be adhered to. The purpose of the key fact sheet is to help consumers to make informed decisions about their insurance products. The ability of the key fact sheets to be an effective tool for informing consumers will depend on the content that is required to be included. If this is not thoroughly tested and vetted to check that it is achieving these goals, this measure will not reach its potential.

It is important that this measure delivers an effective result for the consumer so that we do not see a repeat of what we saw last year. Although I rise to speak in support of this bill today, I have concerns about the implementation of the two measures that this bill seeks to add to insurance law. It is important to note that this bill will merely enable changes to be made to the Insurance Contracts Regulations. The regulations of these two measures are not controlled by this bill and there is concern both by industry and on this side of the chamber about the uncertainty left by this bill. Until we see the regulations themselves and know how these measures will be enforced under the regulations, it is difficult to assess the adequacy of the measures. It is absolutely imperative that more time is not wasted—that Australians have the benefit of both a standard and a universal definition of flood and the advantage of a key fact sheet from insurance providers in order to enable them to easily compare insurance policies. It is in this vein that I support this bill.