The recent flood disaster in Queensland, Australia, has impacted thousands and is weighing heavily on insurers and may incite a change in how flood insurance is sold. The waters were indiscriminate – affecting those insured and uninsured. Those who are insured may find that they are not covered under their plan and will be left with nothing.
A financial analyst, Joshua Zenas, is hearing a definate sentiment of change in the air from consumers and that this will cause companies to be put under the scrutinizing glare of the government. “Given the scale of this disaster,” says Zenas, “and the amount of people who are not going to be covered and will lose everything, insurance companies are going to get a lot of bad press.”
The bottom line is that insurers will not be able to foot the bill for the damage in full.
According to a spokeswoman for the Insurance Council of Australia, “It is such a sensitive time and we understand people are hurting… there are going to be a lot of people who won’t be able to claim.” She further states this event to be an “extremely sad” lesson for many Australians.
The problems with coverage may come from consumer confusion regarding policies. Spokeswoman for consumer group Choice, Ingrid Just, states that there is no standard definition for flood in a number of policies. The group analyzed 45 insurance policies, of which only 30% offered coverage for inland floods associated with swelling river banks – common problems in Queensland during seasons of heavy rainfall.
Choice, among other groups, are encouraging consumers to get in touch with their insurers for clarification as there are a number of policies that will not offer coverage of damage specific to these events.