There has been a "colossal breakdown of trust" between insurance providers and flood victims, an advocate says.
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The second of a two-day public hearing in the Central West was held in Eugowra on Wednesday, May 8, after the House Standing Committee on Economics panel heard from deluge-impacted business owners and residents on Tuesday.
Part of an official investigation pushing insurance companies under the spotlight, the inquiry was triggered after the federal government body became inundated with complaints from flood-hit communities.
Financial counsellor and portfolio manager with CatholicCare Wilcannia-Forbes, Louise Cormie fronted the panel to present evidence in the case on behalf of the agency's clients.
She described the sense of disadvantage and mistrust felt by a cohort of "significant-aged" residents, flagging how some had been involved with their insurer for as long as six decades.
"Initially, they were told they were covered, but then their claims were denied many months later," Ms Cormie said.
"A significant-aged cohort, from the era when trusting the provider is high and never questioning automatic policy renewals, felt coerced into accepting low cash settlement offers.
"Some were informed they were not covered for flood at all and received no further assistance."
'Significant deterioration'
Ms Cormie talked about the "impact of grief" in Eugowra and surrounds, noting the observation of more than 60 funerals taking place since the November 2022 floods.
She also spoke about additional stressors amid the economy's high cost-of-living status, including unknown policy cancellations and "postcode embargoes" on deluge-prone areas prior to the major flood day.
Other items touched on extended delays surrounding disputes, along with receiving a "substandard quality" of house repairs - or an unavailability of appointed trades and materials altogether.
"Our clients and families have experienced considerable negative impacts," Ms Cormie said.
"This includes devastating ones, such as relationship breakdowns, significant deterioration of mental health and sustained financial distress."
A significant-aged cohort ... felt coerced into accepting low cash settlement offers.
- CatholicCare Wilcannia-Forbes portfolio manager and financial counsellor, Louise Cormie on elderly flood victims dealing with insurer woes.
Colleague and senior support disaster financial counsellor, Carole Shennan joined Ms Cormie, with the pair accompanied by Sydney-based Legal Aid senior solicitor, Ma'ata Solofini.
After hearing from Ms Solofini, committee chair and MP Daniel Mulino coined the flood period and peoples' experience thereafter as a "vulnerable time at their darkest hour".
He asked the solicitor if some of the insurance cases "dragged on" due to the "type of water" assessed, which Ms Solofini confirmed.
"It is one of the top disputes in the Central West, yes," she said.
"There are also very few hydrologists available and if you can get one, they're very expensive.
"We had a look at [one] hydrologist report and saw deficiencies [in that document] ... but the problem with that is people have trouble understanding what these reports are actually saying.
"And not just because of the trauma they're experiencing and the overwhelm they're living every day, but they are tricky reports to read through.
"Lucky for us, we have a solicitor who has a science background."
People have trouble understanding what these reports are actually saying ... they are tricky reports to read through.
- Legal Aid senior solicitor, Ma'ata Solofini on hard-to-understand flood assessments carried out by insurance company hydrologists.
Not what they've asked for
Mr Mulino also asked the solicitor if she felt "more guidance around insurer terms" would be useful for clients when it came to understanding insurance wording in the future.
This would mean insurance companies would be required to simplify complex terminology currently woven throughout policies, often tripping claimants up when signing along dotted lines.
"The only standardised term is 'flood' and what we've seen is some insurers will then look at other terms they can define in a different way," Ms Solofini said.
"Really low financial literacy of our clients definitely has an impact, as well" Ms Cormie said.
"We know that for 40 per cent of households in Eugowra, no one has completed Year 12 or above, and this can have a great impact when they're selecting policies.
"Particularly when they're trusting that the people bringing it to them think they can afford it and are covering them for what they've asked for."
Time for change is now
Member for Calare, MP Andrew Gee queried the solicitor on what other improvements could be made to the insurance system as it currently stands.
He noted how the legal service was often one of the main groups "picking up the pieces" in communities in the wake of natural disasters, interested in what Ms Solofini believed needed to change.
"Lots of the issues that we've seen are not unknown, they're issues that we've seen previously," she said.
"[Insurance companies are] aware that what we need to see is action; we need to see a follow through if we're giving feedback to the industry or insurers about what we're seeing in our casework.
"We want to see a change in how they then approach new claims coming through, or new relationships and new policies that they're issuing.
"We want to see those changes actually taking place."
Online surveys surrounding the parliamentary inquiry can be completed until July 31, with submissions also able to be sent to floodinsurance.reps@aph.gov.au or uploaded online.