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Standing Committee on Social Policy and Legal Affairs
03/08/2011
Operation of the insurance industry during disaster events

KOSTANICH, Mr Stan, Private capacity

[12.06]

CHAIR: Welcome, Mr Kostanich.

Mr Kostanich : Stan will do. They all know me as Stan.

CHAIR: I have got a son called Stan so, if I tell you to sit up straight, that is the reason. For the Hansard record could you please state the capacity in which you appear before the committee.

Mr Kostanich : I live at 550 Robinson Street, Carnarvon, or lot 73. I have been there since 1981, when I bought the property. I am born and bred in Carnarvon and I know what goes on around Carnarvon. Firstly, the facts about me that you were told earlier by the gentleman were not quite true. Secondly, I have got to thank Elders Insurance for the way they conducted themselves, especially in my case. Finally, everyone in Carnarvon knows that you cannot get flood insurance.

Mr NEUMANN: Riverine flood insurance?

Mr Kostanich : There were some companies years ago. SGIO used to give flood insurance—

Mr NEUMANN: They are called Suncorp now.

Mr Kostanich : That was years ago. I was with them. In certain areas sometimes if you are in business the risks are too great and you can accept that. I can get flood insurance tomorrow if I am prepared to pay $30,000 a year.

CHAIR: So you have spoken to your—

Mr Kostanich : You can get companies. I had a quote years ago from Norwich Insurance, through Gerry Woodhams, and that was about $30,000. While this inquiry is here I would like to point out a few facts as well. It is not only insurance that we have got to worry about; it is the bureaucrats that do things and affect people's lives, especially in our area.

CHAIR: Stan, unfortunately our focus is on insurance. Maybe over lunch we can talk about other things.

Mr Kostanich : I know it is about insurance, but the thing is you cannot only blame insurance. My insurance came to the party to a certain degree and they all want their money back from whoever is involved. This great country of ours has gone down a path that I cannot understand anymore. Facts are facts and you cannot just blame the insurance company for not doing things for people.

CHAIR: We are not blaming anyone, Mr Kostanich.

Mr Kostanich : Can you understand what I am saying?

CHAIR: Not quite. Our job is to try to improve the insurance industry. I am not sure what you are talking about in terms of blaming bureaucrats because I am sitting next to one and I am part of a government.

Mr Kostanich : Everyone who knows me knows that what is in my heart is in my mouth. I know what is going on. As I said, if it was not for Elders, I do not know if would be on the property that I am on today. I am still not living in my house eight months later.

CHAIR: You said it was damaged in the December flood?

Mr Kostanich : Yes. It is not only the insurance places; it is getting builders in this area. The gentleman who was here before I had dealings with and I know, and he speaks out but he does not know the facts. I get so emotionally uptight when we have a representative going to an insurance inquiry and mentioning—and I am the only one in Carnarvon, because it is only a small town—what I did, when he does not know what he is talking about. That is why I say it is not only the insurance companies here in Carnarvon. I do not know about other areas.

Another thing is that if it were not for Mel, our representative from Carnarvon Growers, I would not even have known that this was on today.

CHAIR: We did notify the Carnarvon Growers Association that we were here, and I think we advertised in the local paper as well. We were not sneaking into town or anything, Stan.

Mr Kostanich : Well that is what it appears to be, because there would have been a lot of other growers around here.

CHAIR: We had media, we put ads in the paper—

Mr Kostanich : Well nobody has seen them, and I got the paper yesterday, mate. That is on Wednesday—the Northern Guardian.

CHAIR: Okay. As I said, we notified the shire council and put posters out.

Mr Kostanich : Out of all this, besides the insurance, I would like you—because there are other people; there is a parliamentary inquiry—to pass the message on about what you see has happened with other areas of bureaucracy. I thank you for time. That is my piece. Before people speak, they should get the facts.

CHAIR: Could you tell us why there was the delay from the December event through until the payout, with your insurance company?

Mr Kostanich : On the Elders insurance: they came up because we had had 12 inches of rain. What do you class as stormwater and drainage and what do you class as flood damage? That is where I say there are other things besides insurance when you look into the industry here in Carnarvon—that is, what bureaucracy do to affect other people, and I am one of them.

CHAIR: But in terms of your insurance policy?

Mr Kostanich : I know that 99 per cent of the insurance policies around Carnarvon state there is no insurance for flood.

CHAIR: So you were aware of that beforehand?

Mr Kostanich : Yes, I was aware of that. People talk about ethnics, Vietnamese and everybody but they forget that to get a property and run your own business you must have a little bit of nous up here and you understand about insurance. Let's get away from the ducks and drakes of things. The truth is that everybody is aware of it. Whether the insurance—

CHAIR: You do not support the suggestion from earlier witnesses that there were people who had language problems with their insurance policies?

Mr Kostanich : Not really. If they can go to a bank to read a bank statement I am sure they can read what their insurance policy is going to insure them for. The point is that you only get what you pay for. In certain areas some people have been caught, from what I hear around the place, because in Carnarvon there is no insurance for flood. But as for drainage water, there is one person who got $200,000. He is only up the road from me. Drainage comes into the area, and this is where the backtrack of bureaucrats covering their backsides comes into the situation here, in Carnarvon.

CHAIR: So how would they affect the definition of flood or inundation?

Mr Kostanich : That is dead right. Depending how you go about it and the wording of the thing, insurance companies will cover it.

CHAIR: Okay.

Mr Kostanich : With respect to definition, it is not the insurance companies; it is the government that accepted the policy that went into the insurance.

CHAIR: Hold on, Mr Kostanich, that is not the case.

Mr NEUMANN: That is wrong.

Mr Kostanich : I thought it was. The guidelines are set by the government, are they not?

Mr NEUMANN: No.

CHAIR: There is an insurance code of practice. That is a self-regulatory code and that is one of the things we are looking at.

Mr Kostanich : I apologise. I thought it was regulated by the government.

CHAIR: The Insurance Act is a federal piece of legislation we have oversight of, but the actual contract would be written by the insurance company. We have heard there are a range of definitions of 'flood' and that is one of the things we are looking at.

Mr Kostanich : There are a range of definitions. You get rain from the top and you get water into your property from the roadside and it is 'storm damage', yet if the river overflows—as happened in Carnarvon, for example—and blokes can be living one mile from the river and other people block off areas and their homes get flooded out, but they don't get drainage. They class that as flooding. This is the sort of thing that is happening in Carnarvon.

CHAIR: That is why we are trying to get some uniformity.

Mr NEUMANN: You were not 100 per cent happy with the claims process by Elders, were you?

Mr Kostanich : To tell you the truth, what Elders did for me was what was in their guidelines. They cannot do any more and I cannot expect any more.

Mr NEUMANN: Did they talk to you about an industry code of practice at all?

Mr Kostanich : Nigel did, yes. When I asked a question, I got an answer.

Mr NEUMANN: How quickly did they resolve your case?

Mr Kostanich : Everything happened on the weekend. From Thursday to Sunday night we were flooded out, not two weeks later, as I heard—

Mr NEUMANN: When you made your claim, how long did they take to resolve it?

Mr Kostanich : The assessor came from Perth. Do not forget it was Christmas holidays. I got the final okay, with the builder's quotes accepted, just the other day for what they are going to do.

Mr NEUMANN: When was 'just the other day'?

Mr Kostanich : A couple of days ago.

Mr NEUMANN: Are you telling me the inundation took place in December 2010 but just the other day you got acceptance by the insurance company of your claim?

Mr Kostanich : No, they accepted the quotes for the builder to start doing the renovation. I have to contribute a lot to it but, if I did not have Elders insurance, I would be up for the whole lot.

Mr NEUMANN: So, as far as you are concerned, the matter was resolved 'just the other day' to use you expression?

Mr Kostanich : Elders accepted the liability of fixing what they are going to fix. They came to have a look.

Mr NEUMANN: Just the other day?

Mr Kostanich : No. They came and got engineers to look at what is flood damage, what is water damage and that sort of thing. They accepted their liability a lot earlier than the other day.

Mr NEUMANN: When?

Mr Kostanich : But the quotes from the builders only came through the other day.

Mr NEUMANN: When did Elders accept their liability—to use your expression?

CHAIR: There were a couple of different floods in January and February.

Mr Kostanich : There were a couple of different floods and they waited for the water engineer to come through to see the damage. When I notified them, they came within four or five days. The point is that there is a person here behind me and he is living in a shed. There is no flood insurance. They got rain damage, but their house is completely gone. Besides insurance and everything, and parliamentary inquiries, sometimes they have got to listen to the people that are involved and hurt and not just concentrate on one thing. There is a person behind me whose husband has lived out of a sleeping-bag for the last nine months. We get blokes here—

CHAIR: We hope to hear from people.

Mr Kostanich : You will. I hope she is going to give you more of a mouthful than I gave.

Mrs MOYLAN: Was there anything in your insurance policy that surprised you that either was not included that you thought was or that you did not think was included but was? Do you think you understood your policy?

Mr Kostanich : For my insurance policy I deal with Nigel. He was my bank manager for years. I paid the policy. So far everything I asked for has come off. I cannot go into the other details. I do not know.

Mrs MOYLAN: Basically you were happy.

Mr Kostanich : Yes, I was happy. Again, I have got to thank Elders Insurance more than the taxes that I have paid to the government for what they have done to these people here.

CHAIR: Thank you very much, Stan.