FOS still inundated with flood claims
One year on from the floods that devastated south-east Queensland, confusion over flood definitions means a huge number of disputes over denied flood claims is still clogging up the resources of the Financial Ombudsman Service.
FOS had received 482 disputes directly relating to the January 2011 floods by 30 June 2011, which had reached almost 1,000 by the end of the year. FOS expected new disputes to continue being lodged into 2012.
FOS said it had given priority to finalising claims relating to the January floods because of the devastating impacts on those affected, but had still only resolved around 45 per cent of claims.
FOS said many of the disputes had been found in favour of consumers or settled between the consumer and the industry, in some cases with a partial payment because of initial damage from inundation or stormwater run-off before further damage was caused by floodwaters.
In these cases, the onus fell to the financial services provider (FSP) to prove the damage had been caused by an excluded event (such as "flooding") rather than a covered event (such as stormwater run-off).
Many of the disputes being raised are due to consumer confusion about the extent of coverage, as well as by the various use of wordings, including flash flooding and capped cover, and the distinction between flood and storm water run-off, FOS stated.
FOS said it is strongly in favour of proposals for a single simplified definition for flood, and the use of a key fact statement, to help eliminate the miscommunications sometimes encountered by consumers at policy inception.
In many of the disputes, it was contended that the FSP did not adequately inform the consumer as to the extent of the flood coverage.
If the consumer claimed to have been led to believe they were covered for flood, FOS had to establish whether an adequate product disclosure statement was provided.
If one was not, it then fell to the FSP to prove that the client had been adequately informed - for example, by way of recorded phone conversation. Otherwise, the FSP would be liable for the claim.
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