I was outside, pulling weeds from the area directly adjacent to the house [part of my bushfire preparations every summer] when I found myself thinking about how easy it would be to make insurance claims easier and more equitable; instead of ‘storm water flood damage’ and ‘tsunami flood damage’ etc or ‘bushfire fire damage’ versus ‘house fire fire damage’ all policies should just be against ‘water damage’ or ‘fire damage’, irrespective of how that damage occurred.
I was really pleased with that commonsense approach until my cynicism kicked in and I realised that that is exactly what the insurance companies do not want. The broader the definitions the more they have to pay out when something does go wrong. As listed companies intent on making a profit and satisfying shareholders, being fair to customers is rarely part of the business plan.
Having made that rather obvious leap of logic I ground my teeth and started thinking about how home insurance really should be covered by a not-for-profit organization. Except. Who. Would. Pay? Clearly only governments have pockets deep enough to fund such not-for-profit ventures. So why aren’t they doing so?
More teeth grinding followed when I realised that if governments were to shoulder the burden of home insurance they would have to increase taxes or diddle some other part of their social welfare programs to pay for it. Neither option would go down well with the many people who do not pay home insurance because they don’t own a home to insure. Clearly then, home insurance is one of those necessary evils that has to remain in the private sector. But not like this. Customers have to get what they pay for. After all, millions of them pay insurance premiums every month knowing that they may never have to make a claim. They throw all this money at insurance companies on the understanding that if they ever do suffer some kind of catastrophe the insurance companies will come to the rescue and pay up. They do not pay to be left up shit creek without a paddle.
I am aware that the principle of ‘buyer beware’ has always applied to insurance as well as more tangible goods like shoes but shoes do not have fine print. Some of this fine print is written in legalese that would make experienced solicitors scratch their heads so how can normal people ‘beware’?
One possible solution would be to have the sales pitch recorded so customers can prove exactly what they were offered verbally as distinct from what may have been hidden in the fine print. Many companies already use a variation of these verbal contracts – for example telecommunications companies who accept new customers over the phone. Or another solution would be for customers left high and dry to initiate class action suits against their insurance companies. Or perhaps there could be a register where these companies are named and shamed. If nothing else that might make the rest of their customers jump ship and leave them to go broke. Yes, I like that idea… -cough-
One thing is for sure – if my house ever burns down my insurance company had better pay up. Or I’ll stamp my feet and cry… which is pretty much what some of the victims of the Queensland floods are doing right now.