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Maurice Blackburn lawyers are preparing
a class action over the 2011 disaster. |
INSURANCE companies will be offered a better payout deal than householders in the planned flood class action in a bid to convince them to sign.
The company financing the action will waive some of its cut of any settlement as a carrot to attract insurance companies to join in and boost the scale of the claim.
Household flood victims who joined the class action would have to pay financing firm IMF 28 per cent of any payout, while insurers and developers would pay only 22 per cent.
John Walker, of IMF, said the floods had cost the industry "billions" and he was talking to "insurers, underwriters, brokers, reinsurers and agents" about coming on board.
"Their support is not essential or critical, but, if it was provided, the claim will proceed," he said.
Suncorp, which paid out on thousands of flood insurance claims, said it had been approached but would not join.
A spokeswoman said: "We don't intend to seek recovery of our losses. We have determined that we wouldn't join the class action."
A spokesman for RACQ, which had the second-largest exposure in 2011, said the insurer had not been approached.
IMF had collected about $1.2 billion for clients in the last 10 years and averaged a return on its investment of about 28 per cent, Mr Walker said.
He expected a lower rate of return on the flood claim because of its large size.
There was no target in terms of numbers of claimants but the total size of the claim would have to be at least in the "tens of millions" for it to make financial sense for his firm, which would risk upwards of $10 million on the suit.
Claimants would be sent questionnaires in the next couple of months to determine the size of their uninsured losses.
An expert on class actions in Australia said law firm Maurice Blackburn would not have initiated a case unless it thought it had an 80 per cent chance of success in the form of a large settlement.
Monash University Professor Vince Morabito said: "The fact that the Commission of Inquiry made findings that point fingers at certain people and entities is a prima facie arguable case."
Prof Morabito thought the odds of a settlement were about 50-50 once a judge agreed the case had class-action status.
Of the 15 class actions filed each year since 1993, the cases settled included payouts ranging from $2 million to $200 million.
The largest payouts were against securities companies on behalf of shareholders, rather than people injured by government negligence, he said.
The Courier-Mail revealed yesterday that Maurice Blackburn had released maps this week based partly on official data it knew was wrong, as part of efforts to recruit householders and business owners.
Property valuer Iain Herriott, who warned a year ago that there were 4500 "virtually unsaleable" flood-affected homes in Brisbane and Ipswich, said it would be "near impossible to quantify the actual and real loss incurred by every individual adversely affected by the 2011 floods".
Independent hydrologist Max Winders said the controversy highlighted the weaknesses of official maps, which were based on a limited number of monitoring sites and on estimates based on modelling.
"You just have to be careful in the way this information is extrapolated," he said.
"You'll see that council's information is of at least similar accuracy to that which has been determined by Maurice Blackburn."
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