AFCA Mandates Higher Payout for Farmers in Flood Damage Dispute

In March 2022, the farmers lodged claims for damage to various assets, including residential properties, agricultural buildings, machinery, and vehicles, following a significant flood event. Achmea accepted the claims but offered a cash settlement based on a scope of works prepared by its builder, without engaging independent experts to assess the full extent of the damage.

The claimants contested the adequacy of the settlement, arguing that without comprehensive evaluations by qualified professionals, the insurer's offer did not reflect the true cost of repairs and replacements. AFCA concurred, noting that Achmea's failure to hire experts to assess the loss resulted in an unfair settlement offer.

As a result, AFCA has directed Achmea to settle part of the claim for the sum insured, increase its offer on the building claim, and pay compensation for non-financial loss. This ruling highlights the necessity for insurers to conduct detailed and expert assessments when processing claims, ensuring that settlements are fair and commensurate with the actual damages incurred.

For Australian farmers, this decision serves as a reminder of the importance of advocating for comprehensive evaluations in the event of a claim. It also emphasises the role of regulatory bodies like AFCA in upholding fair practices within the insurance industry, ensuring that policyholders receive the support and compensation they are entitled to following adverse events.

As climate change continues to increase the frequency and severity of extreme weather events, the agricultural sector must remain vigilant in securing adequate insurance coverage and ensuring that claims processes are conducted with the utmost diligence and fairness.