A victim of the devastating 2011 Queensland floods says he hopes insurer QBE will rule out appealing against a landmark class action decision that could result in hundreds of millions of dollars in compensation.
The former Ipswich deputy mayor Paul Tully, whose home was inundated in the floods, said QBE should follow the lead of the state government, which had already ruled out appealing a judgment handed down by the New South Wales supreme court in November.
The court found two water authorities, Sunwater and Seqwater, were negligent because they failed to follow their own procedures during the floods by releasing water during heavy rains.
This made the eventual flood, which damaged thousands of homes and businesses, far worse, the court found.
In December, the Queensland government said it would not appeal the decision. However, the two water authorities kept their options open by lodging notices they intended to appeal – a decision the government said was in the hands of their insurance companies, which it did not name.
Guardian Australia can reveal that Sunwater’s insurer for the floods was QBE, according to documents tabled in Queensland parliament.
It is unknown whether QBE also insures Seqwater. QBE and the water authorities declined to comment.
A QBE spokesman also declined to comment when asked whether the company had the financial capacity to meet its share of a compensation bill estimated to total between $400m and $1bn.
However, it is expected the insurers will make their intentions clear on Friday, when the class action returns to court for a directions hearing.
The state government sacked Tully and the rest of the Ipswich council in August 2018 after a crime commission investigation into the troubled body. No allegations were made against Tully.
Tully was among claimants in the 2014 lawsuit, which was filed by lawyers Maurice Blackburn in NSW because at the time Queensland’s courts could not hear class actions.
He said working out how much class action members should receive would involve a detailed consideration of their individual circumstances.
“I see it as being a very laborious process,” he said.
Assessing individual claims could take another year, he said.
“Depending on the geographical area and the suburb involved, if people’s claims are reasonable then that’s the basis for paying out.”
He said that if the insurers decided to appeal it could drag the process out for “another two or three years”.
“They’re the ones who are calling the shots and holding this up to the NSW court of appeal and ultimately the high court,” he said. “People are frustrated, angry.”
Insurers usually reduce the amount they have to pay out due to big disasters such as the 2011 floods – or this season’s deadly bushfires – by taking out reinsurance.
However, it is not clear how much reinsurance cover QBE has available regarding the 2011 floods.
In QBE’s 2011 annual report, the then chief executive Frank O’Halloran said that the year’s performance had been protected by an “extensive” reinsurance program but complained that there was “limited market capacity to purchase cost effective reinsurance cover for a frequency of catastrophes”.
“If available, it is often far too expensive,” O’Halloran, who left the company in 2012, said.
On Monday, QBE declared a profit for 2019 of $550m.
