By Esther Linder in Canberra

Hostile, aggressive and underhand behaviour by insurance companies in the aftermath of the 2022 floods has been called out during a parliamentary inquiry. 

Representatives from the financial counselling sector told federal MPs on Thursday how policyholders were coerced, gaslit and ghosted while trying to secure payments to repair their homes and livelihoods.

A House of Representatives committee is hearing how insurers responded to floods across Victoria, Queensland and NSW, and was told the interests of the insurers was to do the best they could to provide as little as possible.

Zyl Hovenga-Wauchope, the executive officer of Financial Counselling Victoria, said a “substantial misalignment of interests” meant insurers were not providing proper help to people experiencing catastrophic floods and the aftermath.

He cited “very vindictive” behaviours including threats made towards policyholders, with case studies ranging from prolonged delays in stripping out waterlogged homes – leading to mould growth – and vulnerable people being given 24 hours to move from temporary accommodation while experiencing domestic violence.

“Their interests are to make you go away as quickly or as slowly as possible,” Mr Hovenga-Wauchope said of the delays, obstacles and poor communication by the insurance industry after each disaster event.

Vicki Staff from Financial Counselling Australia noted that roughly 75 per cent of clients experienced mental health issues, and linked the trauma of catastrophic floods to the ongoing ordeal of dealing with insurers.

Tactics such as quickly offering people cash settlements to finalise claims before proper rebuilding assessments were completed were described as “ambushing” those possibly suffering from PTSD.

“”You’re not in the right frame of mind to be making such a large financial decision when you’re still reeling from a life or death experience,” Ms Staff said, noting one in five people in the NSW central west town of Eugowra had been rescued from their rooftops during the 2022 floods.

Laura Powell from Anglicare Victoria told MPs of the hostile behaviour some of her clients had experienced including finding out insurers had withheld building or claim reports for months for no apparent reason.

“I will say that they do lie,” she said of the insurers.

Ms Powell also detailed reports of an insurance event at a recovery hub in the central Victorian town of Rochester where industry representatives spoke of their bonuses promised during a forum set up for clients to talk to their insurers.

Independent MP Andrew Gee, whose electorate of Calare was affected during the central west NSW floods of November and December 2022, described the inquiry’s submissions as  “a damning indictment of the industry and industry practices”.

The committee will hear from insurance companies and representatives over three further days of hearings.

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