The Commonwealth Bank has set up a $50 million fund it says will help hundreds of its home insurance customers affected by recent floods.
The announcement follows calls for compassion after many home owners discovered their insurance policy did not cover them for flooding from a river but only a flash flood or flooding resulting from a storm.
Commonwealth Bank chief executive officer Ralph Norris and Premier Anna Bligh jointly announced the fund on Sunday morning.
Ms Bligh told reporters she hopes other banks will follow suit.
“This $50 million compassionate fund will go a long way to take some pressure off the appeal fund by providing people who have been paying their insurance, but might not be covered by the definition, with some assistance,” Ms Bligh told reporters in Brisbane.
“About two weeks ago now I called on the insurance companies to show compassion.
“I’m very pleased the Commonwealth Bank has heeded my calls … I think this is a lead every other insurance company can follow.”
She said if every other insurance company did the same as the Commonwealth, Queensland would be back on its feet again in no time.
Mr Norris said having visited flood-damaged Toowoomba and the Lockyer Valley himself, he felt compelled to help.
However, he defended the bank’s current insurance policy that has caused confusion because of the different coverage and definitions of flood events.
Mr Norris said it was important the insurance industry adopted a common set of definitions for flood cover.
He said the distinction between riverine (floods from a rising river) and other flood events was necessary and should remain.
“The insurance rates are significantly higher in riverine cover,” he told reporters.
“It is generally two or three times higher in premium coverage due to the fact building in areas that are subject to rising rivers does mean there will be a different estimation of the potential loss that flows into the premium.”
The bank, which has already donated $1.35 million to the premier’s official disaster relief appeal, also announced an extra $5 million for not-for-profit groups affected by the floods.
Community groups will be asked to apply for the funds.
Local cricket clubs will also be given a hand, with the bank pledging to donate an additional $4000 for every four and $6000 for every six scored in Sunday’s one-day clash between Australia and England at the Gabba.
Meanwhile, the bank has also set aside $1 billion for future business and agribusiness loans, with the first three months provided interest-free.
The loans were about getting businesses, either directly or indirectly affected by flooding, back on their feet, Mr Norris said.