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| One disgruntled RACQ policy holder at Goodna who eventually beat the company before the Insurance Ombudsman. |
The federal government has announced plans to crack down on unfair clauses in insurance contracts following loud protests from consumers that such clauses have caused them to be short-changed on fire, floods and natural disasters claims, according to The Australian Financial Review.
Labor outlawed unfair terms in consumer contracts last year, but insurance industry lobbying convinced the government to exempt general insurance contracts, which includes most motor vehicle, life, home and contents and public liability policies.
Under draft laws to be released in early 2013, an insurance contract will be deemed unfair if it would cause a significant imbalance in the parties' rights, cause detriment to a claimant or is not reasonably necessary.
“Consumers should not have to fight insurance claims with one hand tied behind their back because of unfair contract terms,” Assistant Treasurer David Bradbury said, according to the AFR.
“These new protections will allow consumers, or the Australian Securities and Investments Commission (ASIC) as the regulator, to challenge a term in the courts.”
Concerns spiked following flooding in Queensland last year. The Queensland flood inquiry found that insurer CGU had rejected about 12 per cent of claims, while AAMI rejected 23 per cent of claims and QBE rejected nearly two-thirds of total claims.
20.12.12
COMMENT: This is an important initiative by the Australian Government. It will ensure that dodgy insurance companies like RACQ Insurance are held to account when they try to use dubious practices such as highly-selective definitions of what is - or is not - a flood. Thanks to RACQ Insurance, which many people believe is nothing more than a rapacious revenue collector, thousands of residents of Ipswich, Goodna and Brisbane found to their detriment after the 2012 Brisbane River flood that they were not covered for riverine flooding.
This was something which was hidden deep within the fine print of their policies and was readily decipherable only by a High Court Judge or an Oxford Law Graduate. If rotten insurance companies were made out of electricity, RACQ Insurance would be a giant powerhouse!
This was something which was hidden deep within the fine print of their policies and was readily decipherable only by a High Court Judge or an Oxford Law Graduate. If rotten insurance companies were made out of electricity, RACQ Insurance would be a giant powerhouse!
