RACV behaving Badly
January 9, 2012
“The RACV marketing slogan ‘We’re there for you’ has become a cruel joke,” Sharman Stone, Federal Member for Murray said today.
“The RACV have decided that if in their view your residential property has any level of flood risk, even if there has never been a flood, you must take out their flood insurance and it can cost you thousands of dollars extra. There is no opt-out opportunity, customers are simply told to ‘take it or leave us.’
“Some customers are being told that RACV has had no option given this is ‘new Government policy.’ RACV offices are responding to furious customers by giving them the phone numbers of State and Federal Members of Parliament to ring and alternative companies that may insure them,” Dr Stone said.
“In fact, no new legislation has been passed. This is not about any new laws or regulations.
There are however, Federal Natural Disaster Insurance Review proposals out for public comment. The Gillard Government is seeking responses by March to their recommendations which include:
• a single national definition of the term “flood”;
• a national single access point for flood mapping data, with a portal to be hosted by Geoscience Australia and
• for flood cover to be mandatory for all residential policies,
• Insurance companies to be given the discretion to add an opt-out clause for those not wanting this insurance.
“The Gillard Government Inquiry calculates that 93% of all Australian households have no flood risk at all and so the additional cost to their premiums for these no risk areas would be minimal. They think most would ‘opt out’ given the chance,” Sharman Stone said.
“For the remaining 7% with real flood risk the inquiry states that the flood risk premium: ‘is likely to be modest and most would be expected to take up the flood cover’.
“The Inquiry then proposes that for the 2% of homes at high and extreme risk of flooding, ‘flood risk premiums would most likely be significant and this would impede the take up of flood cover’.
Sharman said, “The Labor Government Inquiry then states that ‘for the high and extreme flood risk homes various mitigation and adaptation measures may be a more cost effective method of managing risk than insurance’.
“The RACV has apparently decided to pre-empt this Government’s inquiry and refuse a flood insurance opt-out option ignoring years of loyal customer support,” Sharman Stone said.
“I have explained the RACV behaviour to Inquiry Minister, Bill Shorten’s office, making it clear that insurance companies can and will behave badly if they are allowed to refuse an opt-out option for flood cover they offer at exorbitant prices.
“I have also called on the RACV to immediately review its decision and allow customers to take the option of declining flood cover should they choose. They must also justify the 300% to 400% increases. Such action would demonstrate that the company is genuine in its desire to provide affordable cover to its members.
“The company must not act until Government policy has been settled and until there are reasonable flood overlays across the country that are beyond contention.
I urge all affected to respond to the Gillard Government Flood inquiry by contacting the General Manager Financial Systems Division the Treasury by e-mail on floodinsurance@treasury.gov.au You can also telephone on 02 6263 3717 to record your views on the matter,” Sharman Stone said.
“RACV customers now notified of massive premium increases should urgently request a review of their fee increases in a written explanation from RACV. If they do not receive a satisfactory response they should then contact the Financial Services Ombudsman on 1300 780 808 and ask for a review of the company's actions in relation to their policy,” Sharman said.