A local council-led class action in the Supreme Court has exposed serious flaws in a civic insurance scheme, especially in the aftermath of recent flooding.
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The case against JLT Risk Solutions in regard to its Statewide Mutual Scheme failed to sway judgement against the insurance agency, however the case exposed serious flaws in the way community money had been managed.
Richmond Valley Council, based at Casino, led the class action which included 21 councils, including Lismore City and advised by a steering committee that included Parkes and Mid-Western shire councils.
After three years in the courts and another 13 months of deliberation the 250 page judgement was handed down this week.
It was alleged that the scheme "breached its general law and contractual duty to exercise reasonable care and skill in the performance of its broking services" reported the council's general manager at Tuesday night's monthly meeting.
The case, which involved no legal costs to the councils involved, had sought to recoup money invested in the scheme going back for decades. The consortium of councils is now considering whether to appeal the outcome.
Meanwhile, an earlier decision by Richmond Valley Council to exit the Statewide Mutual Scheme and go with Civic Risk Mutual resulted in significant financial gain to its community.
"Since the council took action to question the NSW Local Government insurance industry the Richmond Valley community has benefited from significant premium savings in excess of $1.4 million and a positive claims experience following the 2022 flood events," said the council's general manager Vaughan Macdonald.
As a result of those floods Richmond Valley ratepayers benefitted from the full flood cover limit of $5 million and the insurer has vowed to extend coverage for future flooding events.
"Contrary to the Richmond Valley experience, it is understood that Statewide Mutual paid a maximum of $2 million to councils impacted by the flood events and some of those councils will not get flood cover for future flood events," Mr Macdonald said.
"The savings on premiums and the flood events payout have led to financial benefits conservatively estimated at in excess of $4.4 million since 2017/18, which enables council to provide additional services and infrastructure support to its community."
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