An insurer has ceased covering what it calls cosmetic storm damage to roofs, citing the impact of new “disaster chasers” causing a spike in claims.
The move from RACQ appears to be unique in Australia’s industry and has raised concerns that some valid damage could be left without cover.
Another more formalised model can involve, according to industry, a roofing or building company having signed contracts, or certain claims assistants, who allegedly drag out claims to force cash settlements with insurers. But some roofing and assessment companies say they can provide better outcomes for customers in an insurance claim, or warn roofs should be repaired to prevent further damage. RACQ chief executive David Carter told The Australian Financial Review that problems with a new disaster-chasing business model became apparent after a October 2018 hailstorm clobbered Gympie in south-east Queensland.
Influx of claims
People usually file hail damage claims quickly but RACQ saw an influx of roof replacement claims nine months later. RACQ has seen the pattern elsewhere, such as after an April storm in Rockhampton for which it initially estimated damage claims worth up to $35 million. That will now come close to $100 million. “We’ve had claims still coming in recently,” Mr Carter said. Some claims involved hail not affecting the performance of the roof, he said. “If someone’s got damage that’s affecting the water tightness of the roof, we’re absolutely going to deal with it,” he said. “What we worry about is the stuff at the edge, and loading up cost of claims.”
He said another concern was some unscrupulous businesses signing up households “to things that cause the customer, whether it’s our member or someone with [another insurer], to incur costs they’ve signed up for they didn’t realise they’ve signed up for.”
RACQ in December last year altered its product disclosure statement so any new or renewed policies excluded storm damage to roofs unless it “affects the structural integrity of the building”.
Mr Carter said RACQ wanted to keep premiums affordable but retaining the same policy coverage would pressure pricing as reinsurance costs rose. Average renewal premium increases in Gympie were about $63, with RACQ attributing almost a third of that to claims from that one hailstorm.
Still, David Keane, of claims advisory service Solve My Claim, was wary that RACQ’s policy change could be over-zealously enforced to dispute legitimate claims. He cited a roof having enough damage that it reduces the home’s value, without necessarily impacting structural integrity.
“It seems they’re going from one extreme to another,” he said. Mr Keane's business is involved in one dispute about RACQ's policy change, and said his business did not get involved in disaster chasing and agreed such chasers were bad for industry.
Insurers have mixed views on the pressure from storm chasers. The policy document for Suncorp, another key insurer in RACQ’s homeland of Queensland, A Suncorp spokesman said: “Disaster chasers are not a concern for us at this time. Our engagement with our customers has ensured we are managing the costs of natural disaster claims.”
An Insurance Council of Australia spokesman said any customers contacted by storm chasers should obtain in writing exactly what the business was offering, and contact their insurer before signing anything.
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