The Australian Financial Complaints Authority is warning Exmouth residents to think hard before accepting a cash settlement from their insurer. The advice follows about 13 complaints from locals who say they struggled to get proper compensation after Cyclone Narelle hit in March.
Thirteen complaints may not sound like many. But each represents a household that expected insurance to cover the damage and says it didn't get what it needed.
What the Regulator Is Saying
Lead ombudsman Emma Curtis put responsibility on insurers. She said they must account for the lack of locally available trades and materials when preparing settlement quotes. That's a pointed instruction. A quote matters only if it can pay for repairs, and in Exmouth, the workers and supplies needed for the job aren't readily available locally.
Curtis also advised residents who receive an offer to consider carefully whether they could complete repairs for the amount offered. The question is simple. The stakes are high. A cash payment that looks like a resolution can leave a household paying the difference if repairs cost more than the offer.
Who Carries the Risk
A cash settlement leaves policyholders to organise and fund repairs. Insurers, by contrast, priced the risk and collected the premiums. When local trades and materials are scarce, the person holding the cheque must find a way to make the numbers work.
The complaints suggest some residents have already faced that problem. The authority says they struggled to receive proper compensation. It didn't provide details of individual cases, but the pattern prompted the complaints body to issue a public caution.
The authority's message to insurers is as direct as its message to residents. Curtis said insurers must factor local conditions into their quotes. That sets a clear expectation for companies and gives affected residents a standard to hold them to.
Why This Matters:
Insurance is supposed to catch people when disaster strikes. The Exmouth complaints raise a hard question: what happens when a payout doesn't match the real cost of rebuilding? A cash offer that ignores shortages of local trades and materials can leave households underfunded when they're most vulnerable. Curtis said insurers must account for those shortages, setting out what the complaints authority expects of them. It also shows why independent complaints bodies matter. Without somewhere to take a dispute, residents would face large insurers alone. For communities recovering from a cyclone, scrutiny of settlement calculations tests whether the system delivers what it promises.