Natural disasters bring bank loans under spot light
(14 April 2011 – Australia) Banks are under the spotlight coming into the government’s review of insurance after the natural disasters earlier in the year.
The review had found lenders had failed to ensure borrowers held adequate cover against national disasters, and exposed widespread underinsurance. Those affected without flood cover were placed in a particularly bad position.
The review’s chairman, John Trowbridge said banks had lapsed, and stated at the Institute of Actuaries conference in Sydney that it had to be asked whether there’s any responsibility the lenders should take to assist their borrowers to be fully protected.
''If you take a mortgage, your bank will say you must have insurance and in years gone by they used to follow up every year to make sure you kept it current, but they don't do that anymore,'' Mr Trowbridge said.
He will consider whether a national disaster fund is needed to make sure households and businesses can access affordable insurance.
Insurers have complained there is not enough information available on areas that are prone to flooding, and Mr Trowbridge said there was still improvements to be made in this area.
Floods, on the other hand, were unlikely to affect close to 97 percent of all homes in Australia.
The review’s chairman, John Trowbridge said banks had lapsed, and stated at the Institute of Actuaries conference in Sydney that it had to be asked whether there’s any responsibility the lenders should take to assist their borrowers to be fully protected.
''If you take a mortgage, your bank will say you must have insurance and in years gone by they used to follow up every year to make sure you kept it current, but they don't do that anymore,'' Mr Trowbridge said.
He will consider whether a national disaster fund is needed to make sure households and businesses can access affordable insurance.
Insurers have complained there is not enough information available on areas that are prone to flooding, and Mr Trowbridge said there was still improvements to be made in this area.
Floods, on the other hand, were unlikely to affect close to 97 percent of all homes in Australia.
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