Renewal refusal after flood review sparks complaint

17 March 2022

A homeowner has lost a dispute lodged after an insurer declined to renew cover because of a reassessment of the property’s flood risk.

The policyholder said publicly available council flood maps represented the property as low risk and no damage or claims were made last year when the area was affected by a one-in-a-hundred year event.

Following discussions with an elderly neighbour, the policyholder also said that to his knowledge there had been no insurance claims or flood damage on the property for the past 50 years.

Auto & General says data it has received since the last policy renewal identifies the property as a higher risk for riverine flooding and based on the new information and a reassessment the property now fell outside its risk criteria.

The Australian Financial Complaints Authority (AFCA) says its rules exclude complaints about a decision to refuse insurance except where the decision was made indiscriminately, maliciously or based on incorrect information.

None of those criteria were established in the complaint, and the policyholder had not provided any evidence that he had suffered financial loss.

The insurer had advised the complainant of the reasons why it was not renewing, and the man had obtained alternative home and property insurance that includes flood cover, AFCA says.

Information related to the underwriting decision was from external providers and was provided by the insurer to AFCA on the basis it was not exchanged with the complainant due to its commercial sensitivity.

A review of material provided by the complainant showed that the property is about 60 metres from a creek area/drain, and while it may be low risk according to that data, it is only “60 or so metres” away from where the flood risk goes from low to high.

AFCA determined it was not necessary to consult the opinion of a third expert hydrologist.

“I do not believe such an expert would find contrary to the local municipal council and of the financial firm’s experts that the property is not in a flood prone area or explicitly find that the complainant’s home and property would never be the subject of flooding,” the adjudicator says.

This decision is available here.