Stephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | Hansard source

I move:

That the House refer the following matters, relating to insurers' responses to recent natural disasters in Australia, to the Standing Committee on Economics for inquiry and report by 30 September, 2024:

(1) responses of insurers to the claims resulting from major 2022 floods, including the:

(a) south-east Queensland and northern New South Wales (NSW) floods of February and March 2022;

(b) Hunter and greater Sydney floods of July 2022;

(c) Victorian, NSW and Tasmanian floods of October 2022; and

(d) central west NSW floods of November and December 2022;

(2) the inquiry shall have regard to the following matters in respect of the aforementioned floods:

(a) the experiences of policyholders before, during and after making claims;

(b) the different types of insurance contracts offered by insurers and held by policyholders;

(c) timeframes for resolving claims;

(d) obstacles to resolving claims, including factors internal to insurers and external, such as access to disaster-hit regions, temporary accommodation, labour market conditions and supply chains;

(e) insurer communication with policyholders;

(f) accessibility and affordability of hydrology reports and assessments to policyholders;

(g) affordability of insurance coverage to policyholders;

(h) claimants' and insurers' experiences of internal dispute resolution processes; and

(i) the impact of land use planning decisions and disaster mitigation efforts on the availability and affordability of insurance;

(3) the inquiry shall also have regard to insurer preparedness for future flood events; and

(4) the inquiry will take into consideration findings from other reports such as Deloitte's external review of insurers' responses to the 2022 floods, and ASIC's claims handling review.

On 19 July I announced on behalf of the government that there would be a parliamentary inquiry into insurer responses to the 2022 floods affecting South-East Queensland, the Northern Rivers of New South Wales and the central western districts of New South Wales. It is the truth that there is barely a city or town in Australia that hasn't been hit by floods or by fires and other natural disasters in recent years. They are becoming more frequent and more intense, and the destruction more devastating.

About $14 billion is how much the Insurance Council of Australia estimates the damages from storm and flood cost in the period from January 2020 to December 2022. That's $14 billion. Almost every state and territory experienced a major flood event in that period. When these natural disaster events hit, they leave trauma behind and social and emotional crises. They also cause an economic crises for the communities affected. Each time, the recovery job is enormous and multifaceted. Food, shelter and supplies are the most immediate needs. Labourers and building supplies need to arrive quickly into communities. Insurers employ surge workforces to process huge volumes of claims. Experts in hydrology are brought in to determine where, in the case of a flood or a stormwater event, the water came from. With this knowledge, the terms of reference for this inquiry take a whole-of-economy and social view of the effects of these events.

When I announced the inquiry last month, I was with the member for Calare, who's in the chamber today, in the town of Eugowra in western New South Wales. We stopped at a place called The Fat Parcel, a popular local food van. I can assure you that this is not on the Heart Foundation of Australia's recommended eats in New South Wales, but it's a fantastic place to get all manner of burgers, fries and other sorts of goodies. I spoke with some of the tradies who were still erecting temporary block homes for people to live in eight months after the flood had hit and made so many people homeless. The member for Calare and I were welcomed into the homes of Lesley and Brian Smith. I won't forget both what they told us about their own experience and the warmth with which they greeted us. They had used their entire life's retirement savings to move to the town and enjoy a quiet life in the country. When I met Lesley and Brian, they were still living in a temporary block home, stamped onto their front lawn. Eight months after the flood, they were still in a dispute with their insurers. They were unable to move back into their home, which remained painted in my mind.

When we visited Molong earlier that day, I was struck by the sense of community. I met local business owners, like Sarah, who ran the local hair salon, and Kaylene, who owned the local newsagency. Like most small business owners, they work around the clock and invest not only their money but their heart and soul into their businesses. Sarah employed an apprentice and her long-time best friend, who were both left instantly jobless when the flood came. Sarah shifted trades overnight and began working as a labourer, I believe, in a concreting business with her partner—very versatile; from hairdressing to concreting. Kaylene quickly poured her own money into the newsagency to fast-track repairs. The business became the post office, the bank and the convenience store for the town. Kaylene was still waiting for her insurance claim to be resolved when the shop floor remained covered in wooden slats, which were exposed after the owners ripped up the carpet themselves. They all shared stories about the immediate aftermath of the floods. The entire community held the weight of the clean-up on their shoulders. What they didn't expect was the fight ahead when it came to their insurance claims.

In Australia, when we talk about the effects of climate change, we no longer use the future tense; we talk about it in the current tense. One of my first visits on becoming minister was to the town of Lismore in New South Wales' Northern Rivers. I joined with the state member Janelle Saffin, the member for Lismore, who pointed out a sign on a telephone pole that showed the high-water mark from 1974 at 12 metres. At the peak of the 2022 floods, that sign was underwater because the waters rose to 14 metres. Cut through the politics and the denial, and you'll find a simple unavoidable truth: natural disasters are happening more often, and they're getting worse, and, of course, there's inequality at the centre of it. Most exposed communities are in places like western New South Wales, North Queensland, the Northern Territory, northern New South Wales and Western Sydney, where there is a huge threat of extreme weather. In these places, you'll find low-income earners who live in the areas that are more likely to be impacted by the effects of these severe weather events. Let's not mince words. it's low-income earners who will bear the brunt of climate-change-induced severe weather events. They're the same people who struggle to afford the mitigation work, by the way, and they're the same people who are struggling to afford insurance. They're overrepresented in the underinsured or the non-insured. And they're the people who most desperately need a smooth claims process when something goes wrong.

I'm sure the member for Calare will use his own words to describe this in the chamber today, but I remember his very passionate words when we spoke about this in towns like Cudal. I was very pleased to visit my old youth stomping ground in the town of Cudal. When we visited Molong and Eugowra, the member spoke very passionately about his dissatisfaction with the claims-handling process.

In places like these, instead of having a smooth claims-handling process, many found themselves in dispute over exactly where the water came from. Was it stormwater run-off or a flooding creek? Was the water running into the creek or out of the creek? That'll determine the impact on your insurance claim. Hydrology reports are expensive, and few people are trained to write them. These reports can cost an individual up to $10,000. That's money that's always hard to come by, but when you've lost everything it's impossible.

Even where claims are paid out, there can be serious delays in the repair work, and the communities often need to rebuild from the ground up. They can struggle to find enough labourers, and there are supply chain issues that mean delays in getting the building supplies needed, a point that the member for Gilmore has raised with me in relation to the bushfires that affected her community in southern New South Wales in 2019-20. The member for Eden-Monaro has raised the same issue, and, just to ensure that I'm not seen to be partisan, I will say that I've heard the member for Page make similar representations in this place about the impacts of floods on his community. Some losses can't ever be replaced, but when people are suffering, when things have fallen apart, they're entitled to expect that the recovery won't be made harder than it needs to be. They're entitled to a process that is as simple, efficient and compassionate as possible.

That's why we're setting up the inquiry. We want it to look at all of these issues, and we'll give it plenty of time to inquire. I see Dr Mulino in the chamber today. He's an eminently qualified chair, and he'll work across the parliament in a very bipartisan way. I know that others will be invited to join the committee as they need. I expect several reports to be published by his committee to address the various aspects of what is a deeply felt issue. I know there's a lot of expectation, from the communities that I've mentioned, other members of this place and the community and the industry more broadly, about how we can focus on some pragmatic, practical solutions to the problems that people are feeling in their households, businesses and communities.

The committee will hear from people on the ground in affected communities. They'll travel, ask the questions, listen carefully to the answers and try to find a way forward. I look forward to receiving the recommendations that can be made to the parliament, to the government and to industry about how we can make the claims process clearer, how we can deal with affordability issues and how we can ensure that people—and this is all about people—who are going through one of the most traumatic moments in their life can, at the very least, have an insurance process that works much more easily, with less sting and pain in that insurance process.

Before I close, I'll just note that the government is not just about setting up inquiries. The Albanese government, upon coming into government, has had a range of initiatives. The Minister for Emergency Management, Senator Watt, is leading the rollout of the Disaster Ready Fund, which will invest over $1 billion over five years on risk mitigation work, reducing risk with the view that if you reduce risk you reduce the cost pressures on premiums. We've set up a hazard risk partnership to get data and the initiatives and to have better information about firming up our infrastructure. This is a collaborative approach between industry, government emergency management and financial ministries, such as mine, to ensure that we can do better.

I want to thank the member for Calare for his passionate advocacy and for first raising the matter with the Prime Minister about a month ago. I want to thank the member for Moreton, Graham Perrett, and the state member for Lismore, Janelle Saffin. I've mentioned the member for Page, who has raised this matter here. So many members have raised this with me. I am incredibly indebted to their passionate representations in this place. I wish the chair and his committee godspeed, and I commend the motion to the House.

See this speech in context