Insurers blame government red tape and poor planning for flood disaster

‘Do the right thing.’ Insurers and politicians have locked horns over insurance payouts from Cyclone Alfred, as home and business owners lodge more than 9000 claims.

Gold Coast resident Lizzy Burke tries to clean up her Elanora home after a tree went through the roof. Picture: Adam Head

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Insurance companies have hit back at public scoldings from the Prime Minister and two premiers over damage payouts for Cyclone Alfred.

Prime Minister Anthony Albanese said he agreed that insurance companies were “ripping off’’ Australians, and threatened federal government intervention unless they “do the right thing’’ to settle claims swiftly and fairly.

“They have a social licence and people expect them to make payments in a speedy and effective way when they are due,’’ he said on Monday.

“This is the time when insurance companies can restore some of their reputation with the public by acting speedily, and we expect them to do so.

“If not, we’ll give consideration to any measures that are required.

“People take out insurance expecting that they’ll receive support when they need it.’’

A tree smashed through the roof of Lizzy Burke’s home in Elanora after wild winds whipped through the Gold Coast in the wake of Cyclone Alfred. Picture: Adam Head

Queensland Premier David Crisafulli said he was concerned about the soaring cost of insurance premiums.

“Queensland, over the years, has been pretty good to the insurance industry in terms of (having) large portions of the population covered,’’ he said.

“If you look over the last decades, there’s been a lot of people who have paid a lot of money to the insurance industry, and I think they owe it to those clients to be good corporate citizens in their hour of need.’’

Queensland Premier David Crisafulli has called on insurers to be ‘good corporate citizens’ in the wake of Cyclone Alfred. Picture: Tertius Pickard/NewsWire

NSW Deputy Premier Prue Car said people “pay insurance for a reason’’.

“We want to make sure they get what they’re entitled to,’’ she said. “People’s livelihoods are dependent on it … in towns where local businesses employ local people, probably the most important thing is for insurers to pay up as quickly as possible.’’

Insurance Council of Australia chief executive Andrew Hall said on Monday insurers were already processing 9300 claims lodged from Hervey Bay in Queensland down to Coffs Harbour in NSW, for flooded buildings, wind damage, water ingress, destroyed vehicles, and damage to farms.

He rejected the criticism from political leaders, and blamed governments for approving houses in flood zones and failing to train enough trades workers.

Mr Hall said cash payments for food spoilage would be made quickly. “The only thing slowing it down is government regulation that requires people to fill out all of these forms in order to get a payment of $400 or $500,’’ he told ABC News.

“We will help people through that government red tape to get their insurance payment.’’

Executive director and CEO of the Insurance Council of Australia Andrew Hall has complained of government red tape in responding to insurance claims

Mr Hall said insurers had paid out a record $7bn for 230,000 claims after the 2022 floods.

“Ultimately, someone’s going to have to meet that cost,’’ he said.

“There are a lot of people living in non-flood zones who effectively are subsidising those high-risk properties in flood areas.’’

Mr Hall said building costs had soared 40 per cent in the past three years, “so the cost of rebuilding a house has nearly doubled in some areas’’.

He said governments had allowed 220,000 homes to be built in high-risk flood zones across Australia, with just one in four of them insured.

Governments should “take some of the billions of dollars they are collecting in taxes’’ to help prevent flooding, he said.