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Recovery and protection
Recovery and protection
Finalising claims from last summer’s catastrophes is moving ahead as insurers adjust to operating amid a pandemic
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By Wendy Pugh
Handling claims after Australia’s worst natural disaster season on record was always going to be challenging, but the stakes have risen exponentially with the arrival of the most devastating pandemic since the Spanish flu.
Lockdowns and social distancing have seen masks worn on visits to the sites of property claims, digital technology accelerated and teams working from home as COVID-19 has added hurdles while increasing the importance of a rapid response.
“Right now, we need to be safe, but not lose momentum,” Suncorp Head of Claims Michael Miller told Insurance News. “In particular for bushfire-impacted communities, we know the faster we can inject funds into the local communities the stronger the recovery will be from the fires and the ongoing pandemic.”
The catastrophe season started last September and reached a crescendo early this year with bushfires raging in southeast Australia, hailstorms hitting the ACT, Victoria and New South Wales in January and severe storms battering the east coast in February.
Australia confirmed its first case of COVID-19 on January 25. By the end of the month it was evacuating citizens from overseas, and by mid-March the country was in lockdown.
“Since the start of the pandemic it has been far from business as usual,” Insurance Council of Australia (ICA) spokesman Campbell Fuller says. “Most of the industry is still working from home, and centralised call centres have been closed. This is affecting response times, claims-handling and other services.”
ICA figures show the value of claims from the summer storm, bushfire and hailstorm catastrophes reached $5.19 billion by mid-May, and despite challenges and the “handbrake effect” of COVID-19 almost 50% of those have been closed.
For the bushfires, which caused losses of $2.3 billion, almost two-thirds of residential building claims and more than 80% of contents claims have been closed.
Insurers say they have kept claims-handling on track through using new technologies to assess damage remotely, having appropriate protections in place for on-site visits, and minimising any disruptions from having staff working at home.
Mr Fuller says ICA liaised with state and territory authorities to ensure insurance personnel, including claims assessors and builders, could move freely within and between states, despite community travel restrictions, and developed health and hygiene guidelines for personnel accessing ccustomers’ properties and motor vehicles.
QBE Australia Pacific Chief Claims Officer Jon Fox says the insurer’s business continuity plans were activated at the early stages of COVID-19 and included a strong focus on supporting bushfire-affected customers with their recovery.
“We immediately initiated a screening process with our customers and suppliers that assessed any potential transmission risk, before any site visits would be arranged,” he says. “Aside from the health and safety implications, it was very important with the uncertainty of the situation that everyone felt comfortable proceeding in a protected environment.”
Mr Fox says that prior to the pandemic lockdown QBE had created a dedicated “Bushfire Cat” team and it has been able to maintain the same level of service as it was achieving before the pandemic.
Loss adjusting firm Crawford & Co had to realign its workforce after personnel seconded from Canada to assist in the catastrophe response for three months were required to return home early due to the pandemic.
“In Australia, not only did we have to pivot rapidly so that 90% of people were able to work at home but our adjusters also had to adopt new working practices and embrace new technology solutions,” President Australia Tim Jarman says.
“Through this period a number of self-service tools rapidly deployed by Crawford and adopted by carriers helped replace the site visit during this unprecedented time.”
Technology uptake has been critical in allowing insurers, loss adjusters and builders to increasingly manage damage assessment virtually, minimising face-toface interaction and helping fast-track processes.
“Virtual assessments simply require a customer to have access to a compatible device and a mobile or wifi connection to transmit the audio and video data captured,” IAG Major Event Executive Manager Craig Byfield says. “If a connection isn’t suitable, the customer can still take video or photos offline and upload onto a secure portal provided by IAG.”
When a property is visited, the insurer asks assessors and customers screening questions beforehand, and assessors will use personal protective equipment and follow health and safety advice.
Morse Building Consultancy Director Andrew Morse says the designation of insurance as an essential service has meant it has largely been business as usual for his company.
Mr Morse, who is based on the Gold Coast, has been able to move freely between Queensland and NSW, and says the firm’s building and engineering assessments are often carried out without the property owner attending.
“We sometimes meet clients on-site, but all we have done is just keep our distance – we don’t shake hands, we just introduce ourselves,” he says.
“We had two claims in NSW in the early stages, within a week of it being declared a pandemic, where they didn’t want anyone on site, but a few weeks later that had changed.”
Steamatic, which provides cleaning and restoration services after catastrophes, has mostly finished work from the summer disasters, although some bushfire-damaged property owners have expressed a preference to delay until the surrounding landscape begins to green.
“The insurers have been amazing throughout this,” Chief Executive Oliver Threlfall says. “They are accelerating payments and allocating work as quickly as they can. It appears that they are just trying to keep their supply chain happy and in business so that we all come out of this together.”
Mr Threlfall says the wearing of masks by work teams during the pandemic is sometimes off-putting to householders, but reassurances are given ahead of time.
“You pre-warn them that you are coming, and that it’s no disrespect, but we will have masks on because we are going to multiple houses,” he says.
“Being an essential service we have to go if a house is full of smoke or water.”
The positive insurance performance so far in handling summer disaster claims amid the COVID-19 outbreak has been acknowledged at the Royal Commission into National Natural Disaster Arrangements.
For the bushfires, 0.66% of claims have been denied, which compares to an annual average across all lines of 3.9%, according to ICA data presented at the hearings.
Australian Financial Complaints Authority (AFCA) Lead Ombudsman Insurance John Price told the royal commission that the service has received 68 bushfire-related disputes compared with 14,000 for general insurance overall last financial year.
“That indicates to me, at this stage that the insurance industry has performed reasonably well, and proactively in dealing with a lot of these matters,” he said.
Insurers have improved their response over the course of the many natural disasters since the 2009 Black Saturday fires, becoming “very conciliatory” in their approach and working actively with communities, AFCA and consumer groups to resolve matters, he says.
Nevertheless, there is still a long way to go in finalising all claims from the latest catastrophes and the industry is continuing to navigate a range of obstacles caused by both the magnitude of the events and the virus.
ICA documents provided to the royal commission say delays to the removal of debris, which often involves government resources, may slow the repair, rebuilding and settlement of claims, while impacts on the supply chain for building resources are anticipated, especially where materials are manufactured overseas.
The ongoing pandemic means the capacity to have even essential workers attend homes to complete repairs has been limited in some cases as customers self-isolate.
“We have also seen many customers with more minor damage choosing to simply pause their claim until restrictions ease and it is more convenient for them,” Suncorp’s Mr Miller says.
“When a customer comes to us with an insurance claim, it’s usually after a significant event in their life and often it can be quite stressful, and coronavirus is making it even harder. So we have been focused on finding flexible ways to support them through this process.”
Consumer groups note that while the early response from the industry has been strong, disputes following natural disasters typically emerge at least six months after claims are lodged.
“That might be because it all starts out well, and then there are huge delays in the handling of the claim and at that point it becomes a dispute,” Consumer Action Law Centre Senior Policy Officer Cat Newton says.
“It is often only at that point of resolving the claim or during the rebuild work that people realise the policy isn’t meeting expectations.”
Ms Newton says many people in bushfire-affected regions have suffered financial loss from COVID-19 shutdowns and have a lot to deal with, which may contribute to delays in the emergence of claim issues.
“Insurers did take really good early steps after and during the Black Summer and the bushfires, and we want to see that people are not forgotten as we rebuild during these really difficult circumstances,” she says.
Insurers are careful to highlight their awareness of the financial stress that customers are experiencing as the recovery from the summer’s catastrophes now continues in parallel with management of the pandemic outbreak.
“From the outset of the pandemic we’ve been particularly mindful that this crisis adds yet more pressure to people and communities impacted by last summer’s bushfires and hailstorms,” Mr Byfield says.
“The safety of our people, customers and the community has guided our decision-making since January when the impacts of COVID-19 escalated, and this will continue.”
