Insurers opt in as owners opt out
INSURER Allianz fears it will be forced to make flood payouts even if customers consciously refuse cover for such disasters.
INSURER Allianz says it fears political pressure will be levelled at it to make payouts to flood-affected households even if customers consciously refuse cover for such disasters.
The comments come as the insurance industry splits over giving consumers the option of opting out of flood cover.
As The Courier-Mail earlier reported, RACQ Insurance, the state's second-biggest home insurer, has since yesterday only offered compulsory flood cover.
It joins brands including Suncorp, APIA, NRMA and CGU.
Several mainstream insurers have rushed since last year's devastating inundation to offer flood cover in Queensland.
That disaster had triggered a PR shellacking for some insurers after customers claimed confusion about policies that covered for flash downpours but not river flooding.
The catch is flood cover can be expensive - a House of Representatives committee in February cited anecdotes of home insurance rising 36 per cent in an inundated Brisbane postcode.
Insurers are privately weighing up any loss of customers due to unaffordability against a backlash if people claim - even if they opt out - they did not know they lacked flood cover.
Allianz started offering flood cover in Queensland from April, using an opt-out option.
"Opt out'' should help decrease confusion, an Allianz spokesman said.
"But we have a concern that when there's a big event, despite the fact we've given people choice . . . that there'll still be a lot of political pressure to pay claims,'' he said.
Allianz has noted a "quite high'' opt-out rate from people whose property is at risk. This reflected the higher pricing. RACQ said its new approach gave customers certainty.
It had offered flood cover as an opt-in choice before the 2011 floods. Although its policy documents clearly stated whether homes were covered, the insurer copped a hiding from some customers.
Suncorp basked in a PR glow after the last floods because it already had compulsory cover.
But Suncorp's AAMI brand only since February started offering flood cover, and gives an opt-out choice for homes deemed medium-high risk of flooding.
IAG-owned CGU, which has compulsory cover, said research "indicated those customers most likely to need flood cover were also the most likely to choose to go without''.
A government-backed review last year raised the prospect of making all insurers offer flood cover with the opportunity to opt out.
Financial Services Minister Bill Shorten's office said: "The Government is still considering the mandatory opt-out provision'' and awaiting a Productivity Commission report.