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Tuesday, 28 February 2012
Page: 2170

Mr PERRETT (Moreton) (17:13): Mr Deputy Speaker Windsor, this is the first time I have spoken while you have been sitting in the chair and I am looking forward to your judicious and impartial rulings. This time last year Queensland was coming to grips with the terrible flooding that had destroyed thousands of homes and tragically claimed many lives. To all those affected then and now, this parliament on both sides is thinking of you.

Part of the recovery process involves lodging a claim against an insurance policy that was taken out to protect against such misfortune. But for some people insurance claims took months and months to settle. Some claims are still outstanding today, more than one year after the event. This has had a serious impact on people's ability to recover and rebuild their lives. Others were told by call centre staff at first instance that they should not even bother making a claim. People were contacting me for help because they were getting nowhere with their insurance company and were not aware that they could access legal aid or the Financial Ombudsman Service. This situation was not limited to Queensland. My fellow committee members all over Australia and other MPs had similar experiences in their electorates of distressed constituents getting a raw deal with their insurance companies following natural disasters that devastated the country: cyclones in Northern Queensland; floods in Victoria, Western Australia and New South Wales; fires in Western Australia and Victoria—to name but a few. The committee began to realise that many individuals and families were suffering from the huge delays to insurance claims processing, and this inquiry was in response to the many complaints about the insurance industry that too often were falling on deaf ears.

Currently there are no regulations that compel insurance companies to do the right thing by their clients and resolve claims in a timely and satisfactory fashion. The unfair contract terms laws contained in the nationwide Australian Consumer Law do not apply to general insurance contracts. Moreover, claims handling and settlement are singled out for exemption from regulation by the Australian Securities and Investments Commission, the body which otherwise has responsibility for regulating the operation of financial services.

The only curb on how insurers handle claims is their code of practice, written and regulated by the insurance industry itself. The code of practice outlines time frames for assessing claims, responding to requests for information and updating clients on the progress of claims—and sounds reasonably good on paper. However, the insurance industry wrote itself a cop-out clause in section 4 that suspends the code of practice standards in times of catastrophe or disaster—some might say the time when they are most needed. This has been a free pass for insurance companies to treat claims in whatever manner they choose when there is a natural disaster.

During the committee's travels around Australia to regions affected by natural disasters we found that often the insurance claim process had a detrimental affect on people already devastated by trauma and loss. People told us of the stress of being in limbo for months, living in caravans, friends' houses or in damaged and unsanitary homes. A consistent theme we heard across Australia was that not knowing what was going on was the worst aspect of the disaster: claims were not acknowledged, phone calls were not returned, emails were unanswered, third-party experts were sent out to properties with no explanation, expert reports were kept secret, and claims they were verbally denied with no reasons given.

The report that we table today contains recommendations that will increase consumer protections when it comes to the handling of insurance claims. It is imperative that minimum standards for claims handling in the wake of disasters are created, that the insurance industry adheres to them and that there is government oversight to enforce them. The flood events of recent weeks in New South Wales and Queensland remind us that Australia is prone and always will be prone to natural disasters. The insurance industry must ensure that it has the capacity to deliver in a timely manner on the insurance policies that the Australian public purchases for peace of mind.

I would like to thank all committee members but especially the deputy chair, the member for Pearce, for taking us to her electorate under horrible circumstances, meeting with people, and for her great contribution to this inquiry. I also thank the secretariat, who are here in the chamber today, for the great work that they did under an enormous amount of pressure, as we have inquiry after inquiry after inquiry handed to us by the magnificent people to handle such processes. I will now hand over to the deputy chair.