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Tuesday, 13 March 2012
Page: 2710


Mr NEUMANN (Blair) (20:46): I speak in support of the Insurance Contracts Amendment Bill 2011. I thank the member for Maribyrnong, Minister Shorten, and the Prime Minister for their support for me personally and for my community during the flood. I represent most of Ipswich and the whole of the Somerset region. The floods in January 2011 affected 1,500 homes and 473 businesses, many of which were agribusinesses, in Ipswich. They affected 530 houses and 400 businesses, about 279 of which were agribusinesses, in the Somerset region. These regions really were hard hit as the Bremer River, the Brisbane River and the release from the Wivenhoe Dam raged across the Brisbane Valley, the rural parts of Ipswich, into the Ipswich CBD and down into Goodna, in the electorate of the member for Oxley.

This legislation will not solve every single problem that the people of the Somerset region and Ipswich have suffered. They continue to suffer emotional and psychological trauma. Doctors tell me they still see patients who have been traumatised by the floods. In many ways people are still getting back on with their lives. If you drive through some parts of my electorate at night you still see large numbers of houses without lights. People have moved away from those areas. I will give an illustration: 550 children attended Ipswich East State School; there are now 450. Its catchment is in the very flood affected areas of Bundamba, Booval, North Booval, East Ipswich and Basin Pocket. I was at the school recently and spoke with the kids in the classrooms. There were school captains and many kids in years 6 and 7 living in flood affected communities.

I read an editorial in an issue of the Queensland Times newspaper published directly after the 1974 flood. Ipswich in those days had 74,000 people; now it has over 175,000 people. The editorial said that we have to learn the lessons, take action, move on and not allow the same mistakes to occur again. Sadly, we did not learn every lesson we needed to, and the consequences are that people are still suffering. We hope that these legislative changes will make a difference, that they will bring simplicity to the law and conciseness to the people's understanding of their legal rights. I think that the key facts statement and the clear simple definition of flood will go a long way to solving this problem.

The insurance industry has a lot to answer for; it really does. I am a member of the Standing Committee on Social Policy and Legal Affairs, and I spoke earlier this evening in the Federation Chamber in relation to our report In the Wake of Disasters, which has 13 recommendations. Once again, I urge the government to take up those recommendations and to have a strong cop on the beat with ASIC, the regulatory and monitoring authority, in relation to the insurance industry. It should be not just a licensing authority but a monitoring authority with tough sanctions and tough enforcement to make sure that insurance companies honour their code of practice not simply in the breach but actually in observance, and that there are penalties. Sadly, that is not the case. The code of practice needs to be complied with in flood situations. It needs to be mandatory and it needs to be across the whole industry. We welcome the moves by the Insurance Council of Australia to take some small steps along that way, but it is simply not good enough. I hope the government takes up the recommendations we have made.

One of the big problems we found in my community was caused by the definition of flood. People just about needed a master's or a doctorate in law to understand the definition. I looked up my own insurance policy with Ansvar—I think I am pretty well educated, and I practised as a lawyer for a long time—and saw that the word flood was mentioned a couple of times. I found I did not have riverine flood coverage. Sometimes people looked at a policy and then had to look at a website and then look at some other part of the policy. It was difficult for them. Hydrologists were a challenge at times. Another big problem we had—and this is where this legislation will help in some way—was defining what a flood was. Was it flash flood? Was it stormwater? Was it rainwater run-off? Where did it come from? How were you affected? Businesses and homes were affected by this. Was it riverine or inland water flow? Was it caused by a creek, the Bremer River or the Brisbane River? Was it caused by Deebing Creek or Bundamba Creek or did something else cause it? It was often difficult. It did not matter whether you were a church, like the Salvation Army at Bundamba, or a business like Llewellyn Motors or the flower business of Coral and Kevin Larsen at Fernvale; it was all a challenge and it was difficult for people to understand. At times it was uncertain, and people did not really know where they stood. It is important that we amend the Insurance Contracts Act and the law in relation to these issues because the Insurance Contracts Act is the main legislation governing insurance contracts in this country. It came into being in 1986. Under an insurance contract, the parties must act in the utmost good faith. I do not think that has always been the case with insurance companies in how they have dealt with people. Facts need to be materially given if they affect the mind of a prudent insurer in determining whether to accept insurance.

The intent of the Insurance Contracts Act was to improve the flow of information. That has not always been the case. People have often felt traumatised by the flood and then traumatised by the claims-handling process. They were not always told about their rights. Sometimes they were, regrettably, dissuaded from making claims. At other times they were not given the information that they needed. These are really big problems in the area of insurance. They were not often give information about internal and external dispute resolution processes or their right to contact FOS or where they stood with legal aid. All of these issues were not necessarily covered.

I think a standard definition of flood would make a big difference. In fact, it is not the shadow Treasurer but the member for Maribyrnong who has led this charge on behalf of the government. He came to my electorate. We did not have any CEOs of insurance companies come to my electorate of Ipswich for the two fora we put on. The CEO of the Insurance Council of Australia came on those occasions, to his credit, and stayed for a short period of time on both occasions. But no-one came to Ferndale in the Brisbane Valley when we put one on with Senator Joseph Ludwig. The definition of 'flood' that the minister is proposing means the covering of normally dry land by water that has escaped or been released from the normal confines of any lake, river, creek, natural watercourse—whether modified or not—reservoir, canal or dam.

It has taken a lot to rebuild Queensland, my home state. But the insurance companies really had the capacity to play ball and to cooperate more fully. The insurance industry in this country—and the big players are Suncorp, IAG, QBE Insurance Group and Allianz Australia—had the capacity. They have a total asset base of about $130.9 billion. They had a revenue of $42.1 billion and a profit of $5.6 billion in 2011. This was at the height of the impact of Cyclone Yasi in North Queensland, floods in rural Victoria, floods in Western Australia and terrible floods in Ipswich, Brisbane, the Lockyer Valley and the Brisbane Valley, and they were still making $5.6 billion in profit in the industry. They are not exactly short of a quid, so they can come to the party and take a more community approach with respect to their social and community obligations to people.

It is important to legislate to increase consumer protections and consumer knowledge. A key facts statement is particularly important. I know that Minister Shorten, the Minister for Financial Services and Superannuation, made that point very clearly when he announced that a key facts sheet on home building and home contents insurance policies would become mandatory for all home building and home contents insurance policies. He said this—and I agree with him:

Too many people are confused by lengthy insurance contracts and product disclosure statements.

The key facts sheet will provide clarity on what is covered by home building and home contents insurance policies and will make it easier for people to compare different policies. People are entitled to know exactly what is and what is not covered under their insurance policies. The deadline for submissions in relation to that key facts sheet is 23 March 2012.

The member for Dunkley was quite critical of us in relation to the flood levy, but the flood levy was necessary. Let me give you a couple of illustrations. In terms of raising money—and people gave incredibly generously of their time, their effort and their money—even in a city like mine, with a pretty spectacular mayor in Paul Pisasale, who has a great capacity to raise money all over the place, there was only about $2 million to $3 million raised in the Ipswich mayor's flood appeal. In the Premier's flood appeal, far less than $300 million was raised. But we know it will cost about $5.8 billion to rebuild after the floods, cyclones and disasters. Where are we going to get the money? Realistically, do you expect people to put their hands in their pockets yet again? It was a necessity for us to do a flood levy. The member for Dunkley criticised us in his speech in relation to this, but I do remember the Leader of the Opposition on national TV saying in the next day or so he would come up with how they were going to come up with the $1 billion and not agree to the flood levy. One day went past, two days went past and then a couple of weeks went past and there was a kerfuffle in the coalition party room in relation to this issue. They could not come up with $1 billion. How in the world they are going to come up with $70 billion to get themselves back to where we are I will never know. How they are going to pay for their paid parental leave scheme is another story entirely. Eventually they had to go to the One Nation play book. That is how they eventually got it—through the deferral of foreign aid. In the end, if they followed their policy, they were still left with problems.

Dr Stone: Madam Deputy Speaker, I rise on a point of order. I believe that the speaker is straying quite substantially from the topic of this bill.

The DEPUTY SPEAKER ( Ms AE Burke ): The member for Murray will resume her seat. I do believe the speaker has strayed quite substantially as well, but I am the one who determines these things. The member for Blair should refer to the bill before the House.

Mr NEUMANN: I will. I took the opportunity to rebut the absurd and outrageous claims of the member for Dunkley in relation to it.

There are amendments in this legislation. We are doing it, as the member for Dunkley did say, through standard definition by regulation. I do not see those opposite taking any great exception in relation to these issues when it comes to other regulations. A standard definition of 'flood' for riverine flooding and other types of flooding that covers small businesses, strata title and home building and contents is not an outrageous, ridiculous thing to have. A key facts statement that is allied to a product disclosure statement also will provide consumers with key information regarding home and contents insurance, whether these are combined or individual. This matter was referred to the House of Representatives Standing Committee on Economics back in November 2011. The committee released its advisory report on the Insurance Contracts Amendment Bill in February 2012 and recommended that we pass the bill. That also was the recommendation of the Standing Committee on Social Policy and Legal Affairs in its report, which was handed down in February.

There are important reforms here. We are doing other things apart from those. We have taken the initiative on flood mapping and data with a portal and information that is available to people. We think this is particularly important. We have made the point that councils need to have that kind of information available to consumers and ratepayers because, when you talk of thousands of people being affected in a community like mine, the impact on people's lives is incalculable. This legislation is in the best interests of my community. I have no doubt it is in the best interests of Queensland and our nation. I support the legislation.