Stephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | Link to 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.

Andrew Gee (Calare, Independent) Share this | Link to this | Hansard source

When residents across the Central West woke up on Sunday 13 November 2022, they had no way of knowing that it would be the last day before their lives were split in two: before and after the storm. That night and the following morning, locals across Molong, Cudal, Eugowra, Wellington and Canowindra faced water torrents so strong and terrifying that roads became rivers, homes sailed down streets and two much-loved residents were, tragically, lost.

For those who saw the absolute destruction of that day and the monumental clean-up that followed, it would be hard to find a scene more gut-wrenching and heartbreaking. But more heartache was to come. Hundreds of disaster-hit residents and business owners, eager to pick themselves up and fight on, found themselves at the mercy of insurance companies. In the nine months since, the rebuilding and recovery process has been made much harder, and the tragedy much worse, by the cold-hearted and shocking response of insurers to policyholders. In some cases it was almost like they were in competition for which one could care less. Our region and many other disaster-hit areas along the east coast have been left reeling from the callous conduct of insurance companies, from long delays in claims processing to widespread knockbacks. It's taken a massive toll across our region.

Stories of tragedy are everywhere. During the public meetings I held around the electorate recently, we heard stories of homes being over-stripped out, denial after denial of claims, and insurance premiums skyrocketing for some people to up to 10 per cent of the value of their property per year. The stories of our disaster-hit residents who faced horrific torrents of water, only to be hung out to dry by their insurance companies, must be heard.

Change needs to come from this. That's why I called for a parliamentary inquiry into the insurers' response to these natural disasters. I would like to thank the Assistant Treasurer and Minister for Financial Services for visiting the storm and flood affected towns of Eugowra and Molong recently and seeing firsthand the devastation that residents have been faced with. I would also like to thank the minister and his office for their productive engagement in drafting the terms of reference for this inquiry. I thank the Prime Minister for doing what he undertook to do in determining if a parliamentary inquiry would be possible. This inquiry must not be just a box ticking exercise. It must be a turning point, a pivotal moment in the way insurers deal with disaster-hit policyholders. Enough is enough. In response to my question last week on this very issue, the Assistant Treasurer confirmed—and he repeated it in the House today—that it was through listening to stories like those shared by Sarah Bone from 17 Shades Hair Studio in Molong, Kaylene Philpott from the Molong Post Office and Newsagency, and Brian and Lesley Smith from Eugowra that made him see that a broader scope for the inquiry into insurance was needed.

As Assistant Minister Jones said in his response, 'Australians take out insurance policies to protect themselves in times of need and tragedy.' These policies are meant to be a safety net for policyholders, not an added burden when disaster strikes. Insurance policies should not only be simple and easy to understand; they should not be adding to the anxiety created by a disaster through mismanagement of the claims process. The Assistant Treasurer said he took from his visit to our area that communities like Eugowra, Molong, Wellington and Canowindra have pulled together like country communities in Australia do. But they need more support and they need their insurance claims dealt with better and their policies honoured in a better way. That is why I engaged so heavily with the Assistant Treasurer to produce the terms of reference that I believe will enable not just residents from our area but people across Australia who have had their lives turned upside-down by natural disasters and the response by their insurers to tell their stories and ensure this level of heartbreak is not experienced again.

I note that one of the terms of reference did raise an eyebrow, and that is that the report will take into account other reports, such as the Deloitte report into the insurers' response to the recent storm and flood events. I just say this about that particular issue: whilst I wasn't consulted on that particular term of reference, to me, that is the big end of town reviewing the big end of town. Deloitte was commissioned by the Insurance Council of Australia to review their performance, and they obviously want the committee to take that into account. Well, I have no doubt that this committee will give that report the weight that it will deserve. I think it will be the evidence that local residents and business owners around Australia will give directly to this inquiry that will really tell the story. I put my faith in this committee and not the review that the big end of town is undertaking for the big end of town.

I urge the inquiry to travel to the Central West to hear the stories of heartbreak and the cold-hearted response of insurers, just like the Assistant Treasurer did during his visit. The reality is that there is a huge power imbalance between policyholders and insurance companies. At the end of the day, if a policyholder wants to fight a knockback from an insurer, they're going to need to fork out big dollars for an expert hydrology report and also a solicitor. If you've lost everything or your business is in ruins, there is just no prospect of fighting back. That's the cold, hard truth. Despite what the industry says, at the end of the day that's what you need to do—you need the hydrologist and the solicitor to take these companies on.

The stories of insurers trying to do the right thing are sadly few and far between. Australians expect insurers to be assessing claims in a generous and kind-hearted way, and nothing less. Insurance companies don't answer just to shareholders but also to the nation. They don't just have insurance contracts with our residents; they also operate with that social licence. We need to get to the bottom of what's happened here and make sure that the pain that insurance companies have inflicted on our communities is not repeated in others. I'm hoping that this inquiry can shine a real spotlight on the experience of our local residents and that they will get a chance to tell their stories on a national stage so that other communities won't have to go through what we have endured.

I also urge the state and federal governments to activate the full suite of disaster assistance measures that have been made available to other parts of the state but have sadly have been denied to our residents. This is support that has not been delivered to date—assistance such as the home buybacks and retrofit schemes, the Community Assets Program to help rebuild towns and villages, funding for our damaged roads and bridges, and a program similar to the Northern Rivers Commercial Property Return to Business Support Grant. The people of the Central West deserve nothing less than the same level of support these other areas have had, and I will keep on fighting until they get it. The injustice of this support being activated for some of the state not our region is appalling. We are being treated as second-class citizens. It's wrong, and this wrong must be made right.

I look forward to this inquiry being a catalyst for change for disaster-hit Australians right around our country.

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

I thank the member for Calare for his comments. In addition and in closing, I would just clarify a comment I made earlier. I mentioned The Fat Parcel in Eugowra. Just in case it wasn't abundantly clear, what I saw when I met with Judd and Tracey in this little community square—it's a pop-up food van. It's not just a small business; it's actually a meeting place for the entire community. I think he was stranded on the roof of his truck during the floods. He was one of the first in to help people sort out their businesses and their problems afterwards. I saw a tremendous human being and I saw somebody who is providing a service as a gathering place. If that wasn't abundantly clear in my earlier comments, I welcome the opportunity to clarify now.

Question agreed to.