The recent Queensland and Victorian floods make it clear — Australia needs a comprehensive, national, public insurance scheme, to cover floods, bushfires and other major natural disasters.
The federal and state governments should combine to establish a national insurance scheme to protect the interests of working people and small businesses.
The January 21 Sydney Morning Herald reported on the abject failure of most private insurance companies to provide proper coverage to ordinary, working householders.
“Insurers have determined to take a hard line on stricken policyholders in Brisbane, leaving tens of thousands of flood victims uncovered and facing financial ruin,” the SMH said.
It said insurance claims for flooding in Toowoomba and the Lockyer Valley would likely be accepted. But many flood-affected Brisbane residents would be abandoned.
The SMH said: “This is the view of insurers understood to have been reached at a board meeting of the Insurance Council of Australia this week and revealed during a briefing attended by the Herald between Suncorp-backed Vero Insurance and hundreds of brokers who write insurance policies on behalf of business customers...
“Industry estimates suggest that more than 60% of houses and business damaged in the floods of last week had no insurance or flood coverage, leaving them facing financial ruin.”
Government leaders have admitted the serious problems with the private insurance industry's response to the Queensland flood crisis.
Queensland Premier Anna Bligh questioned the behaviour of private insurers on January 16 on Weekend Sunrise.
“It's hard to believe that Australia can't do better than this,” she said. “When you see the scale of this and understand the havoc and heartache this has brought, it is hard to believe we can't find a better system.”
Bligh and Prime Minister Julia Gillard have weakly urged insurance companies to be more “flexible” and “show compassion”, while Queensland Treasurer Andrew Fraser suggested if the private insurers don’t lift their act, then a government-sponsored scheme to provide funding for flood victims may be needed.
Unsurprisingly, the Insurance Council of Australia said on January 19 that “calls for a government-sponsored scheme … have not been welcomed”.
Well, of course they would say that. And that's why we must campaign to demand that private insurance companies provide fair flood compensation to their policyholders.
But pressure must also be put on the federal and state governments to abandon a fruitless “private sector solution” and begin to set up a truly national, comprehensive, public disaster relief insurance scheme.
The flood crisis should also begin a discussion over insurance in general. The giant insurance corporations are making a fortune out of household, car and other forms of insurance.
Most people pay exorbitant insurance premiums, but never, or rarely, need to claim.
We should now take the opportunity to discuss the formation of a comprehensive national, public, no-fault insurance system to cover all forms of insurance liability.
The creation of a truly comprehensive insurance scheme would need to spread the risk of claims over the whole of society through a special levy steeply graded toward the big end of town. Private industry and wealthy households would need to bear the biggest cost.
A certain analogy can be made here with Medicare, which is a (supposedly) universal, national health insurance system.
Of course, only a minority of people suffer directly from the impacts of big disasters such as floods and bushfires. But almost everyone will make some kind of insurance claim during their lifetime.
Similarly, while some people suffer serious medical crises during their lives, everyone requires medical attention at some point.
Just as we need to defend and extend Medicare and the overall public health system, and stop taxpayers' funds being used to subsidise the private health insurance industry, we should urgently move to set up a public insurance scheme to take over the role of the greedy private insurers.