After 18 months of battling, I’ve lost any faith I once had in our insurance industry

Last Friday, the House of Representatives standing committee on economics released its report of the inquiry into insurers’ responses to the 2022 major floods. Anyone expecting them to intervene and enforce stricter standards and accountability across the insurance sector shouldn’t hold their breath.

As a commercial lawyer, I’ve witnessed some shocking conduct over the years. From fighting over a cowboy hat and the cost of horse semen, to dysfunctional families battling it out over multi-million dollar succession plans. But the actions of Australia’s biggest insurance companies, enabled by the government and local councils, sets a new standard in appalling behaviour.

Much of Molong was seriously damaged after the 2022 floods. Credit: Steve Gosch

In November 2022, Molong, in NSW’s Central West, and its surrounding districts was rocked by a one in 500-year thunderstorm. What can only be described as an inland tsunami brutalised the neighbouring town of Eugowra, resulting in damage to 80 per cent of homes and insured losses of around $150 million.

I live and work in the community, and following the devastation I provided pro bono services to 12 businesses that required assistance with their insurance claims. Eighteen months and more than 250 hours later, I’ve lost any faith I once had in our insurance industry.

I dealt with all the big insurers, as well as smaller, boutique agencies, and can confidently say they’re all the same. I sat through non-apologies, blame-shifting, inconsistent offers and misleading information. In one case, offers were continuously miscalculated and grew smaller with each conversation. In another, I was informed that one client’s claim was delayed simply because she had retained a lawyer.

Across the board, insurers sought to minimise payments on legitimate claims. They were greedy in signing up new customer policies and then callous in claim denials. They relied on overly technical arguments based on fine print in their product disclosure statements that, according to the Insurance Contracts Act 1984 (Commonwealth) should be front and centre before the contract is entered into.

Deloitte assessed insurers’ response to the 2022 floods in South East Queensland and NSW and found that a total of 242,351 claims were lodged – six times higher than the average for similar events in 2016. A year after lodging, almost 40,000 claims were still outstanding, and of the 34,269 complaints made by policyholders, 44 per cent were related to delays in claim handling.

Ultimately, the businesses in my community were successful in securing a total payout of more than $1 million. Payouts they were entitled to. Payouts they had paid premiums on for many years to protect themselves should this kind of event ever occur. That they had to fight so hard to get what they were entitled to was a disgrace.

Most of my clients suffered secondary trauma and were forced to seek counselling after dealing with insurers whose lack of empathy left them not only financially devastated but emotionally scarred. And even with their respective payouts, $150,000 on a $500,000 loss barely touches the sides.

As reprehensible as it is, insurance companies are beholden to shareholders and no one else. Despite catchy slogans, they are not “here to help”, they exist for profit, as demonstrated by the close to $1 billion profit IAG recorded in 2024.

Federal and state governments, along with local councils, are complicit in this egregious financial, mental and emotional abuse of their citizens. Because while insurance isn’t a public function, there need to be checks and balances on how the private companies administering it operate. And this problem is only set to get worse with more life-changing climate-related disasters predicted.

Within the committee’s report are 86 recommendations, including that insurers must decide on claims within 12 months or be forced to pay; that insurers provide clear guidance on the operation of averaging provisions to commercial policies (which is already being legislated in the Insurance Contracts Act); and that insurers communicate key customer policy information in plain English.

While the recommendations are sound, they are undercut by language like “should consider” and allow too much wiggle room for an industry already committed to dodging obligations wherever possible.

These gigantic loopholes render the report little more than lip service. For example, an insurer forced to decide on a claim within 12 months may only accept a claim in part, which would enable an insurer to pay less without breaching the code.

Until state and federal governments and local councils get their act together to properly manage disaster preparedness and flood mitigation, the burden to clean up climate disasters will fall on insurers who cannot be relied upon to do the right thing.

I sincerely hope Prime Minister Anthony Albanese’s $4.3 million clifftop property is adequately insured. I wonder if he has read and understands the fine print in his 50-page product disclosure statement to determine what exclusions apply?

Kirsty Evans is a commercial lawyer and partner at Cheney Suthers Lawyers.