Ombudsman: ‘Insurers got it wrong’

Ombudsman: ‘Insurers got it wrong’

Ombudsman: ‘Insurers got it wrong’

The Financial Ombudsman has claimed that insurers got it wrong over hundreds of pay-outs for the 2011 floods and homeowner appeals have resulted in a staggering two-thirds being successful against the insurer.

According to a report in The Herald Sun, insurance companies got it wrong when handling hundreds of claims by victims of the 2011 floods and the Financial Ombudsman has ruled overwhelmingly in favour of the victims.

At the centre of the payouts is the controversial release of water from Wivenhoe Dam – the flood wave – that went on to flood thousands of homes and properties downstream.

The Financial Ombudsman found the heavy rain that fell from 4am on January 11, 2011, prompted engineers to later adopt the "W4" release strategy of Wivenhoe Dam – under which protecting the dam became a priority over limiting downstream flooding.

A total of almost 59,000 claims were lodged after the disaster. Of those initially rejected by insurers, 1182 appealed to the ombudsman.

Lead Ombudsman for general insurance John Price yesterday revealed that more than two-thirds of those have since been resolved in favour of the flood victim or a result mediated. One hundred and sixty-six disputes are not finalised.



 

4 Comments
  • Graeme 9/01/2013 1:06:46 PM
    Being in New Zealand where we do not have flood insurance, but have water damage, it is difficult to grasp what the issues in Australia are. It would have been interesting had this article said why the claims had been declined and why the FO had over-ruled the declinature.
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  • Robert (BrisVegas Qld) 9/01/2013 11:25:44 PM
    Flood (as defined potentially differently in the domestic and commercial insurance products per Australian insurer) is normally an exclusion, unless specifically requested by the customer / intermediary on behalf of the customer to be included. Obviously the customers that want / need flood insurance coverage are ..... going to go gurgle up when a large water issue occurs.
    At this stage it would appear that a dam wall holding back the rain and then the dam controllers letting the held-back water go into the watercourse below the dam wall at a certain time and flooding areas below the dam wall, is not a 'flood' under the definitions in the policies of the insurers that applied the exclusion.
    An interesting interpretation (result) is my opinion and I am sure a reaction to flood cover will be reviewed by many insurers.
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  • Charles 10/01/2013 11:43:40 AM
    Gee, if the Ombudsman says that; it must be right. They are never wrong.
    I will await for a a proper Court of Law to decide.
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