Bligh targets tardy insurers

Insurers could be forced to automatically pay the full cost of clients’ claims under a Queensland Government proposal

September 27, 2011

Insurers could be forced to automatically pay the full cost of their clients’ claims under a proposal from the Queensland Government to bring the industry into line.

Premier Anna Bligh is targeting insurers in the wake of their lacklustre efforts during the state’s devastating floods earlier this year.

Her government’s submission to a federal parliamentary inquiry into the insurance response to natural disasters advocates changes to the General Insurance Code of Practice.

"The Code should specify a timeframe for decision making and if overall assessment times are not improved the Commonwealth should consider legislating for "automatic claim approvals" where reasonable assessment timeframes are not met," the submission says.

The plan advocates a "name and shame" process whereby insurers could be compelled to advertise their failures to comply with the code.

And in a move to end the practice of insurers avoiding compensation claims following events such as the Queensland floods, Bligh is calling for a clear and standard definition for the term ‘flood’ to be adopted.

The Federal Government would need to amend the Insurance Contracts Act, and Bligh says a provision should be slotted into the Act putting the onus of proof on the insurer to demonstrate that the given event was not as a result of a flood.

Bligh also wants changes to force insurers to publish internal dispute resolution and Financial Ombudsman Service performance to allow the public to scrutinise their record. Furthermore, her proposal says insurers should offer consumers the choice of suppliers.

"What's clear from the worst disasters in Queensland's history is that the response of insurance companies has not been good enough and the industry must do better," Bligh says.

"Too many people have had to wait too long."

Bligh has indicated the name and shame proposal would be an effective measure in preventing repeated or serious breaches to the Insurance Code of Practice.

"I wonder how often these breaches would continue if insurance companies knew they'd have to pay to advertise their own bad behaviour," she says.

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