Nrma Accepts Damage As Storm

Newcastle Herald

Wednesday June 13, 2007

By IAN KIRKWOOD and JULIEANNE STRACHAN

NRMA Insurance has vowed to accept all water damage from the Queen's Birthday weekend as storm damage, putting pressure on other insurers not to classify it as largely uninsurable flood damage.

More than 20,000 insurance claims have already been received by the Insurance Australia Group (IAG) and Suncorp companies, and thousands more are expected.

The insurance industry has traditionally refused to pay out on damage that assessors say is flood damage rather than water generated by a storm, and government regulators have urged the industry to change its policies.

NRMA's decision to treat all of its water claims as storm damage will come as a relief to policy holders.

"There has been some confusion about insurance coverage, however there is no confusion for NRMA Insurance, as the damage during this week's events are the result of a massive storm," operations manager Suzanne Joliffe said.

A spokeswoman said the NRMA pledge did not apply to another IAG insurer, CGU Insurance.

The move came as Premier Morris Iemma urged insurers to "err on the side of people who have paid in good faith and taken out a policy in good faith".

"Lets not get into an argument about flood damage," Mr Iemma said.

"This was a storm, an extraordinary combination of gale force winds, rolling thunderstorms, torrential rains and raging torrents caused by storm and that's the starting point.

"I want them to err on the side of ensuring people who have paid in good faith, that have taken out a policy in good faith, that they interpret the policies for them for the benefit of people who are facing ruin."

A spokesman for the Insurance Council of Australia said Mr Iemma seemed to be forgetting that insurance policies were a detailed contract between two parties, not an informal guideline on how to do business.

"That said, it is up to the individual insurance companies as to how they interpret flood damage or storm damage," the insurance council spokesman said.

A spokesman for the Insurance Council of Australia said policy holders should read their policies and contact their insurers "so they know how it relates to them".

State Opposition Leader Barry O'Farrell said the Government would only have "goodwill" to persuade insurers to be generous.

"[But] I don't expect that goodwill does not exist in the insurance companies," he said.

The Australian Securities and Investments Commission wants the insurance industry to simplify its storm and flood clauses and use standard definitions for flood, storm and rainwater.

The commission recommended a brochure called Turning The Tide: A Guide To Getting Your Insurance Claim Paid, available online at www.legalaid.nsw.gov.au.

© 2007 Newcastle Herald

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