Monday, January 17, 2011

R U Insured?

Australians don't have a scheme like the eminently sensible New Zealand disaster insurance scheme. We are dependent on private insurance companies and every time there is a disaster, such as our present floods, it gets messy. People don't know if they are insured or not. Insurance companies are evasive, although Queensland largest insurer, Suncorp, has promised all its customers that they will be covered. Well, what about Suncorp subsidiary insurance companies that trade under a different name?

Insurance companies use definitions like whether it was rising water or running water to decline paying out. Customers are generally unwilling to pour through the fine points of their insurance contract and they would be lucky if they understood what they were reading anyway. Like to try to pin someone down at the insurance company for a straight answer about whether something is covered? Good luck. I tried once and failed.

After the disaster politicians start making noises about the insurance companies acting decently and fairly.

Why? People forget insurance companies, banks and other commercial institutions are companies who are there to make money. That is their reason for being. They are not charities and they are not in business to irresponsibly distribute their shareholder profits.

What politicians need to do, if they won't set up a disaster insurance scheme, is simply to make sure all insurance policies have a water damage clause. Damage by water? Covered. Damage by fire? Covered. Damage by earthquake? Covered. Yes, we will all pay a bit more, but spread over every insured person, precious little.

It is called regulation. Time has proved that free rein capitalism does not work for the greater good and capital needs government regulation.

9 comments:

  1. I think too that insurance companies have the right to hike up rates - or refuse to insure at all - where floods have been previously.

    As a country girl who was raised along the Murray River I saw it flood twice, yet new houses were built in the most likely spots a decade later. When it inevitably did flood again, the paper was full of stories of angry locals being denied insurance payouts.

    I'm not saying it's not a tough one, but we all have to start thinking about where we live and if a 'once in a 100 year flood' happened twenty years ago, in these times of climate change and El Ninio, it'll happen far quicker than that.

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  2. Actually, our EQC insurance scheme covers earthquakes and landslips, and you are only covered if you have private insurance anyway, which may still have to make a top up. People here living in flood-prone areas here may also be denied flood coverage by their insurance companies, but I think they would mostly be aware that was the case.

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  3. I rent so I would assume the landlord is insured, daft if they're not. Which reminds me I must get contents insurance, some day. The car and the cat are insured!

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  4. I have two policies, one for the house and another for the contents.
    Trying to do the right thing, I started to read them, two sentences in and I'm lost in the insurance jungle. Who writes these things anyway? And why not plain English?

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  5. I have no idea, I ring up and tell them I only drive the house to church on Sundays, and they do the debit thing to my hip pocket.

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  6. I think some of the semantics we are seeing are absolutely disgusting. Surely we pay enough tax now to be able to assist. Maybe it becomes something like the medicare levy where you pay less if you have private insurance coverage because the other problem is that too many people either don't bother to insure or underinsure and expect a handout.

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  7. Or maybe compulsory insurance if buying a house - as with cars (comp 3rd party)? Or a levy - the gun levy that caused our Medicare to rise several years ago SURELY is no longer required - so use it for disasters. There's no buffer now that Conroy has spent the Future Fund on the NBN ...

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  8. I agree Kath. Of course many people have made a lot of money over the subdivision of flood prone areas. The less off of course will buy these flood prone properties and take their chances. It is all so wrong.

    Thanks KN. I suspected it was not quite as good as it sounded. In fact I knew because I had a good look at it post CC quake.

    Fen, do you really need contents insurance? Isn't most of what you have of the standard that you would like to update it in the future. Unless I had really expensive stuff, I doubt I would bother with contents insurance. We have it here for water flooding from above or us flooding below more than anything. Lecture I may do, but I am only assuming we are covered for that.

    RACV policy is not too bad Jahteh. They do spell our fairly clearly what is covered and what isn't. But we are insured elsewhere as their premium was so high unless we fitted window locks to prevent a burglar entering via a window, haha.

    I laughed Jayne.

    Loz, it is something that needs sorting out and I don't think private enterprise is the best way to do it.

    But Red, we need the NBN, don't we? While great things could be done now, ala Opposition Plan, NBN really will future proof us for a long time. Most less well off home buyers who live in flood prone areas would have loans with banks and the banks would insist on insurance.

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  9. Hmmm, nah some of the stuff I have is quite expensive, from my more well off days and some stuff I inherited. The rest I could care less about. Still, if I lost them in a flood or fire I wouldn't want new ones so it defeats the purpose I guess

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