Insurers Face Intense Scrutiny Over Quake Claim Rejections

2

Muswellbrook Shire Council conducted a survey among residents after the quakes, identifying extensive structural damages and a community riddled with anxiety. The survey, reflecting feedback from about 200 participants, showcased a troubling pattern: more than 50% of claims have been turned down by insurers.

Contrary to local concerns, the Insurance Council of Australia (ICA) maintains that insurers are diligently processing claims. The ICA anticipates that most unresolved claims will eventually receive full or partial settlements. An ICA spokesperson clarified in a statement to insuranceNEWS.com.au, “When assessing a claim relating to an earthquake, insurers engage expert engineers to assess potential damage.”

Such diligence, however, has done little to placate local leaders like Mayor Jeff Drayton, who remarked, “The response from insurance companies has been a joke. They have taken so long to assess the claims, only to reject them, leaving people in limbo and wondering what’s the point of insurance.”

This issue isn't isolated, echoing precedents such as the significant Victorian earthquakes in 2021. These earlier events also saw numerous claims lodged, with many resulting in rulings favorable to the insurers from the Australian Financial Complaints Authority.

Typically, homeowners might discover minor, pre-existing damages only after scrutinizing their homes post-quake. Insurance often does not cover such pre-existing conditions, contributing to a rise in rejected claims. As noted by industry reports, while earthquake damage tends to be included in home policies, ambiguous cases caused by routine earth movement or thermal expansion present challenges.

The ICA emphasizes the capacity of expert engineers to “easily distinguish” genuine earthquake damage from other types of defects. Yet, those dissatisfied with insurance outcomes have multiple recourses. Customers may initiate internal disputes, and if unresolved, escalate them to the Australian Financial Complaints Authority.

An underlying concern, though unproven, attributes these seismic events to nearby coal mining operations, raising questions about insurance policies' concordance with evolving geological realities.

With residents increasingly aware and anxious, the ball is in the insurers' court to restore trust. How swiftly and equitably these claims are resolved might well define insurance responses to future, inevitable natural calamities.

Published:Thursday, 21st Nov 2024
Source: Paige Estritori

Share this news item:

Insurance News

Travel Insurance Dispute Highlights Pre-Existing Condition Clause 22 Jan 2025: Paige Estritori In a recent case that underscores the importance of understanding insurance policy clauses, a man who cut short his vacation in the United States to be with his terminally ill sister-in-law has been denied an insurance payout. The ruling, made by the Australian Financial Complaints Authority (AFCA), favored the travel insurer due to the claimant’s lack of coverage for pre-existing medical conditions of relatives. - read more

Dutton Calls for Urgent Solutions as Insurability Crisis Hits Halls Gap 22 Jan 2025: Paige Estritori Peter Dutton, the leader of the Coalition, voiced pressing concerns over the growing issue of 'uninsurable risks' during a recent visit to the fire-stricken tourist town of Halls Gap in Victoria. The picturesque location, frequently visited by tourists, experienced significant bushfire disruptions over the Christmas holiday, highlighting broader insurance challenges. - read more

Storm Devastation: Over 11,000 Claims Filed in NSW and ACT After Severe Weather 21 Jan 2025: Paige Estritori The recent onslaught of electrical storms that lashed across New South Wales (NSW) and the Australian Capital Territory (ACT) has resulted in a flurry of activity from the insurance industry, as shown by the impressive number of claims filed. In an eventful week of wild weather, the Insurance Council of Australia reported an influx of 11,366 claims tied to the severe storms that began on January 15. - read more

Severe Weather in Eastern Australia Sparks Insurance Claims Spike 17 Jan 2025: Paige Estritori Recent storms sweeping across New South Wales and parts of Queensland have led to a surge in emergency calls and insurance claims, as residents grapple with the aftermath of strong winds, heavy rainfall, and hail. This extreme weather has posed significant challenges to numerous households and businesses, prompting a rallying cry for assistance. - read more

Broker Sentenced for Fraudulent Builders’ Insurance Scheme 15 Jan 2025: Paige Estritori In a significant legal crackdown, a broker has been sentenced for his involvement in selling fraudulent builders’ warranty insurance to construction firms in New South Wales. This case underscores the urgent need for regulatory vigilance in the insurance sector. - read more