The life insurance industry has mobilized to help those impacted by bushfires across Australia. A range of measures and initiatives have been announced:
1. Premium and Fee Waivers
Premium waivers for up to 3 months have been offered to those affected by bushfires (including volunteers experiencing hardship) by the following life insurance companies:
- Integrity Life
- TAL (including Asteron Life)
- AIA (including CommInsure)
- Zurich (including OnePath)
Some of these offers are an extension of earlier bushfire relief measures announced in November 2019 and can be applied for in addition to ongoing drought assistance packages.
ASIC has also provided relief to those affected by the bushfires, including small businesses, by deferring or waiving company fees owed to ASIC.
2. Donations to Bushfire Relief
Insurers have been quick to donate to those organizations at the forefront of bushfire recovery. Some notable donations are:
- AIA will be donating $100,000 to bushfire relief – half to Australian Red Cross with the rest to be spent on rebuilding impacted communities
- TAL has pledged a donation of $200,000 to the Red Cross which is in addition to the $30,000 donated in November 2019
- Zurich has donated $60,000 immediately to the Red Cross on top of the $40,000 given to the Red Cross and the Rural Fire Service in November 2019. Zurich is also pledging up to $500,000 through matched donations.
- AMP employees and the AMP foundation have donated more than $300,000 to the Red Cross.
3. Counselling and Grief Support
Given the long term human cost of the bushfires, insurers have ramped up their mental health offerings:
- AIA is working with APM who have established the Assure Community Support Line, a free telephone counselling service for Australians impacted by bushfires. Qualified psychologists experienced in providing crisis counselling can be reached on 1800 276 113.
- Under its MindFIT initiative Zurich will be extending additional mental health support to customers at claim time, promoting resources available via Mindstar and assisting community re-building programs
4. Pro Bono Financial Advice
Industry associations AFA and FPA are working on providing Pro Bono financial advice to help Australians impacted by bushfires to rebuild financially.
The associations are supporting members who want to volunteer their services to those affected by the bushfires.
AMP has also partnered with its advisers to provide free financial advice to both AMP clients and members of the general public who have suffered a major financial or personal loss in the bushfires.
5. Lost Document Recovery service
Meanwhile the Financial Services Council has launched a document recovery service which helps consumers whose life insurance policy documents are lost or destroyed in the bushfires.
FSC chief executive Sally Loane said “There are a few scenarios where we can help, for example, if you need to make a claim for a relative in the case of a fatality; if you have been injured and can’t work; or if you have simply lost your policy documents and details.”
6. Processing of Claims
ASIC has announced its commitment to ensuring that insurance claims by Australians affected by the bushfires are handled with the “utmost good faith” by the insurance industry. ASIC’s Deputy Chair Daniel Crennan has indicated that ASIC is “working with insurers and other key stakeholders to ensure that claims are handled efficiently and fairly”.
In addition, the Financial Services Council (FSC) has announced that life insurers will treat those making bushfire related claims as “vulnerable customers requiring additional support” under the FSC Life Insurance Code of Practice.
“This means affected Australians will have their claims assessments and decisions prioritised and people may have access to advance payments to help alleviate financial hardship” explained Sally Loane.
Individual insurers have also made commitments to prioritise bushfire claims, reduce evidence requirements and allow more time for document submission.
Consumers impacted by bushfires can find information on where to seek help and advice on the ASIC MoneySmart website.
The Cost of Underinsurance
While natural disasters like bushfires are not among the major causes of death in Australia, they are a tragic reminder of why life insurance is needed.
The 2009 Black Saturday bushfires in Victoria took 173 lives, however only around 20% of these were covered by life insurance. In contrast 87% of properties were covered by insurance.
The Royal Commission into the Black Saturday bushfires estimated the loss of life to be worth around $645 million to the community. However only around $5 million is estimated to have been paid in life insurance claims. This amounts to an average payout of less than $150,000 for those who had cover.
Default life insurance through superannuation means that today most working Australians have at least some form of life insurance. However Rice Warner estimates of underinsurance show that many young families with children are still significantly underinsured.