Insurers Face Intense Scrutiny Over Quake Claim Rejections

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Muswellbrook Shire Council conducted a survey among residents after the quakes, identifying extensive structural damages and a community riddled with anxiety. The survey, reflecting feedback from about 200 participants, showcased a troubling pattern: more than 50% of claims have been turned down by insurers.

Contrary to local concerns, the Insurance Council of Australia (ICA) maintains that insurers are diligently processing claims. The ICA anticipates that most unresolved claims will eventually receive full or partial settlements. An ICA spokesperson clarified in a statement to insuranceNEWS.com.au, “When assessing a claim relating to an earthquake, insurers engage expert engineers to assess potential damage.”

Such diligence, however, has done little to placate local leaders like Mayor Jeff Drayton, who remarked, “The response from insurance companies has been a joke. They have taken so long to assess the claims, only to reject them, leaving people in limbo and wondering what’s the point of insurance.”

This issue isn't isolated, echoing precedents such as the significant Victorian earthquakes in 2021. These earlier events also saw numerous claims lodged, with many resulting in rulings favorable to the insurers from the Australian Financial Complaints Authority.

Typically, homeowners might discover minor, pre-existing damages only after scrutinizing their homes post-quake. Insurance often does not cover such pre-existing conditions, contributing to a rise in rejected claims. As noted by industry reports, while earthquake damage tends to be included in home policies, ambiguous cases caused by routine earth movement or thermal expansion present challenges.

The ICA emphasizes the capacity of expert engineers to “easily distinguish” genuine earthquake damage from other types of defects. Yet, those dissatisfied with insurance outcomes have multiple recourses. Customers may initiate internal disputes, and if unresolved, escalate them to the Australian Financial Complaints Authority.

An underlying concern, though unproven, attributes these seismic events to nearby coal mining operations, raising questions about insurance policies' concordance with evolving geological realities.

With residents increasingly aware and anxious, the ball is in the insurers' court to restore trust. How swiftly and equitably these claims are resolved might well define insurance responses to future, inevitable natural calamities.

Published:Thursday, 21st Nov 2024
Source: Paige Estritori

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