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Wednesday, 23 March 1994
Page: 2043

Senator PANIZZA (12.45 p.m.) —I bring forth today a matter of public interest. I do not think it is any great news for me to say that the rural industry in Australia is not having a very good time at present. When one runs a business—whether farming, small business or mining—in the rural areas of Australia, budgeting and control of finance are very serious matters. What is also very serious is the matter of insurance. In cases of unforeseen circumstances, a business might go into liquidation because an operator or a businessman may have to pay out for a vehicle or a plant that is not insured. That is why insurance is a very important aspect of business life.

  I wish to bring in front of this chamber a matter that has happened in Western Australia with a particular person. Normally, I do not use this chamber to try to interfere with business or the normal backwards and forwards of what goes on in the thrust of business in Australia, but this is an outstanding and important matter.

  On 31 December, a vehicle owned by a Mr Peter Capito and a related partnership and companies was involved in a serious accident involving fatalities at Greenmount in Western Australia. I am sure that most of the people in this chamber would have read about it in the papers at the time. There were only two fatalities but 21 vehicles were wrecked at the bottom of Greenmount. The Department of Transport is looking at reasons for that as far as the road goes, but that is not the matter I am addressing.

  Despite a searching and detailed investigation by the police at the time, there has been no hint of any allegation of wrongdoing on behalf of the driver or of any defect of the vehicle. This matter is not in front of the Supreme Court yet and I hope it does not get in front of the Supreme Court. As it is not, I feel free to speak on the matter.

  Immediately after the accident, Mr Capito—the owner of the vehicle—advised his insurer. That was 12 weeks ago. His insurer is connected to Elders Ltd of Australia and that company is Commercial Union. Mr Capito advised the insurer immediately of the fact of the accident. Despite cooperating fully with the insurer and the assessors appointed by the insurer, and despite making many phone calls, Mr Capito was unable to obtain any advice from the insurer as to whether or not it would indemnify him for the claims that were coming in. Honourable senators should remember that 19 vehicles were involved, as well as the other property and personal injury and damage caused in the accident.

  It was not until 16 March 1994, after intervention by a solicitor on behalf of Mr Capito, that the insurer indicated it would not make a decision on the question of indemnity until after the coronial inquiry. This inquiry, like all other coronial inquiries, is to determine the cause of death of people in the accident, not to determine the question of indemnity under an insurance policy. That is exactly what a coronial inquiry is, nothing else. It is not to inquire into whether insurance should be paid or not.

  In these hard times in the rural sector we have a case where an insurer, that is, Commercial Union, has been happy, along with Elders Ltd of Australia, for 60 years to take nearly $1 million of premiums off this particular farmer—and his father before him, of course—but when there is a claim, the insurer, on the most spurious of grounds, delays making good its obligations under the policy.

  I know that one of the things that has been raised is the experience of the driver. What qualifies a driver to drive a particular vehicle? It is having the licence that is required to drive that particular vehicle. An employer, talking to an intended employee, asks the employee, `How much experience have you had?' and `Have you got your licence?'. The employee says, `There it is', and one presumes that that is all that is required. If the insurance companies require more than the standard drivers licence, then they should make that a condition of the insurance policy. It is as simple as that. None of this was done and, as an excuse not to pay out, Commercial Union is pointing to the so-called inexperience of the driver—a driver, to my knowledge, who is well into his thirties and has had his drivers licence for a long time. How could he be classed as inexperienced? It is not any condition whatsoever of the insurance policy.

  As I have said, Commercial Union, along with Elders, has been happy to take $1 million worth of premiums off that farmer in the last 60 years. From my knowledge—and I know this family pretty well—the biggest damage that they claimed for was a bent fender on a car, in all that time.

  Firstly, the action of Commercial Union in failing to keep the policyholder advised in writing of the actions is to be deplored. Secondly, to use the fact of the coronial inquiry to delay making a decision on liability is a shabby manner in which to treat an outstanding member of the rural community. This person is an outstanding member of the farming community and other communities in Western Australia.

  Mr Capito is now waiting to replace that vehicle so that he can carry on his business of farming. What is more, the cropping season is around the corner in Western Australia—or we hope it is around the corner when the rains start coming. He will have to borrow in excess of $200,000 to replace the truck or to enter into an expensive leasing arrangement to ensure that the balance of his produce last year is carried to the market and, of course, to put the new crop in.

  It is 12 weeks since he lodged his claim. If that was an average small businessman who was without his rig for 12 weeks, that person would be bankrupt—and would be bankrupt in a fortnight, let alone in 12 weeks. Yet here we have the Commercial Union refusing even to look at the situation. He has been told that he could hire a vehicle. He can do that but that is, of course, expensive. Then he has to keep all the accounting procedures to prove—in the Supreme Court, no doubt, judging by the way the Commercial Union is acting in this case—that he legitimately incurred those expenses. If the Commercial Union were to win the case in a Supreme Court action, then not only would he be without his vehicle but he would have a great cost and expense to hire the vehicle in the meantime. We in this place know what a court may or may not do.

  When it comes to insurance, I believe it is time we looked at the question of policyholders, in circumstances such as this with Mr Capito in my state of Western Australia, to ensure they have a statutory right to the losses they incur so as to avoid having to prove the situation to a court. I call on the government to look at reform in the insurance field. I can say, in relation to a particular company that my own family is with, Westshore of Western Australia, that we have not had such fiascos as Mr Capito is involved with in this case with Commercial Union. Elders Ltd, which claims to be the top pastoral house of Australia, recently refloated on the stock exchange, is standing by—or seems to be standing by—and letting Mr Capito sweat it out. It has been collecting commission on premiums, and it has been collecting for Commercial Union. Yet it seems to be standing by and not bringing things on.

  In relation to proposed reform of the insurance industry in Australia, maybe it is time for that when a policyholder submits a claim with a prima facie case that the accident did happen. Of course, the driver was sober as was proved. It was 10 o'clock in the morning so I presumed he was sober. But he was tested to make sure that he did not contravene the drink-driving rule. It should be a case where it is up to the insurer, not the insured, to prove that there is no case to answer. In other words, when a claim is made, I believe it should be up to the insurance company to pay up—in this case, in excess of $200,000—to replace Mr Capito's vehicle, and not make it mandatory for the one who is insured to prove the case.

  In the few moments I have left in this debate, I just reiterate all I have said because this is a case that stands out. It was a very unfortunate case. Probably because of the lack of funding on that particular road over the years—even though Mr Brereton visited it last week and said that the Commonwealth would make funding available—it is very unfortunate that two people died in this accident that, to me, happened through no fault of the owner or the driver. There were 21 vehicles wrecked and the only saving grace of the accident was that there were not more killed. I welcome the federal government's promise to provide the money for an alternative route. But we have got a case here where Commercial Union Insurance has got a lot to answer for in not immediately settling the matter, and Elders Ltd also has a case to answer as to why it is not getting its insuring agents to the negotiating table and paying out that claim to Mr Capito.