Flood Inquiry report will help hold insurers to account

Financial Counselling Australia (FCA) has welcomed the release of a Parliamentary report into Insurer’s responses to the 2022 Major Floods. 

“The good news is, if these recommendations are adopted and enforced, consumers will be treated better and more likely to receive fairer outcomes from their insurers after weather disasters,” said Vicki Staff, FCA’s Coordinator of Disaster Recovery. 

FCA, the Financial Counsellors’ Association of Queensland, Financial Counselling Victoria, Financial Counsellors’ Association of NSW and Financial Counsellors’ Association of Tasmania made two submissions to the Inquiry. All up fourteen recommendations were made, and almost all have been accepted either wholly or in part.  

“We are particularly pleased to read the recommendations concerning cash settlements, temporary accommodation and trauma-informed training for insurance company employees,” Ms Staff said. 

“Now is the time for action. The system has to change and it’s up to the industry, regulators and government to ensure these recommendations are enacted as soon as possible,” she said. 

We provided the Inquiry with data that shows, what we believe, to be the widespread practice of offering inadequate cash settlement amounts.  

“We found that many insurers were often ‘low-balling’ and financial counsellors were able to negotiate much larger amounts. In fact, in one area alone, they were able to obtain a total increase of more than $3.3 million for cash settlements offered to 40 clients. This is an average of an additional $83,000 per client,” Ms Staff said. 

The financial counselling sector plays a pivotal role in supporting individuals and communities navigating financial crises, including those arising from natural disasters like the 2022 major floods. They provide free guidance, advocacy, and support to individuals grappling with insurance-related issues, housing concerns, debt, and overall financial instability. 

“To this end, we are pleased the report also recommends that insurers should be required to, when offering a final cash settlement, refer the consumer to community legal advisers and financial counsellors in the local area.”  

The submission to the inquiry can be found here.  

The supplementary submission can be found here.  

To arrange an interview contact Maura Angle on 0418 334 121 or email [email protected].