EBM RentCover policyholders usually enjoy a quick claims settlement – it’s part of the service and support we know you appreciate most. So, what’s going on at the moment and why are some claims taking longer than usual to be settled? Read on to find out.
When your rental is damaged, you and your agent want it repaired as quickly as possible. So do we! Like you, we know that the sooner the rental is repaired, the better – it reduces the risk of further consequential damage occurring, enables the property to generate income again (reducing any loss of rent claim), allows the property to be re-let if it is vacant and generally also reduces the amount of a claim.
So, while we always try to settle your claim as quickly as possible, sometimes things happen that derail the best of intentions. And lately, there have been factors beyond anyone’s control that are causing delays and disruptions to all kinds of regular business activity, including settling insurance claims.
At the moment, we are seeing an unusually high number of claims on the back of the COVID-19 pandemic and big insurance events thanks to Mother Nature. However, with Australia’s historically low unemployment rate, there are simply not enough people on the ground to tackle this demand (think loss adjusters and experienced claims specialists).
Building and trades have felt the labour shortages even more so than insurers. Coinciding with a heightened demand for building services has come a severe shortage of workers. According to the Housing Industry Association (HIA), all regions across Australia are reporting an acute shortage of skilled trades and all trades are in short supply. The HIA Trades Availability Index indicates that the industry is experiencing the most significant skills shortage in two decades.
What this means, is that it’s hard for insurers to secure the services of a loss adjuster or a builder/tradie to assess the cause of a damage claim and provide a cost to repair that damage. Without the input of these professionals, it’s difficult for insurers to settle a claim. The issue with a lack of trades also means it’s taking much longer to have repairs made, as insurers simply cannot get tradies to properties.
The repair issue has been compounded by a shortage of building materials. COVID-19 has resulted in global supply chain disruptions, making both raw and finished materials harder to get, more expensive and delivered later. The pandemic-induced supply chain disruptions have been worsened by other global events, such as the shipping delays caused by the Suez Canal blockage and now the war in the Ukraine. Locally, border closures and flooding of transport routes have also had an impact.
This has meant that repairs are being delayed as the materials needed aren’t available. In some cases, it isn’t only building materials that are in short supply but other goods too, so replacing lost contents may also take longer.
Extreme weather events
Already constrained labour and material supply issues have been further impacted by the recent spate of extreme weather events. In 2020-21, the Insurance Council of Australia (ICA) declared five catastrophes – all weather-related (storms, floods, bushfire and cyclone) – which resulted in 134,000 claims worth $2.28 billion. This year’s east coast floods have already seen more than 215,000 claims being lodged with an estimated value of $4.3 billion.
When large-scale events like these occur, there is increased demand for insurance and building services. This makes it even harder to get access to a loss adjuster or trades, leading to longer repair and replacement times. The recent flood event has meant that insurers have had to bring in more than 100 overseas assessors on special visas after being hit with hundreds of thousands of claims, according to the ICA. The ICA also noted that insurers had hired thousands of people at call centres to help with the influx of enquiries and claims. It isn’t just those caught up in the weather event that are impacted though. When the ICA declares a catastrophe, insurers are obligated to prioritse those claims, often unavoidably pushing out the settlement times for other non-catastrophe event claims.
Though not a new issue, claims settlement can be delayed by landlords and/or their agents failing to submit the supporting paperwork needed when making a claim. As the policyholder needs to prove a loss, it’s really important that supporting documentation and evidence is provided. This helps the insurer to assess the claim. And the quicker an assessment can be made, the sooner repairs can be carried out. If the paperwork isn’t provided when the claim is first lodged, then you’ll be asked for it later on – stretching out the process.
Local and global events have conspired to put pressure on insurance claims settlements. Despite the challenges, landlord insurance providers are governed by the general insurance Code of Practice which includes obligations for claims handling. At EBM RentCover, we will always comply with the Code, but we’ll also try our best to assist you by settling your claim as quickly, but comprehensively, as possible. If you have any questions about claims, please call EBM RentCover’s Expert Care team on 1800 661 662 or visit our online claims portal.
*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 661 662 if you have any questions.