Insurance companies have been put on notice that the Albanese Government is prepared to take action against insurers if they play hardball and delay compensation to victims of tropical cyclone Alfred. And this warning of government retribution has come straight from the top.

With claims mounting over 9,000 on Monday, Prime Minister Anthony Albanese didn’t mix his words. “(Insurance companies) have a social licence, and people expect them to make payments in a speedy and effective way when they are due,” he said from Lismore. “This is a time where insurance companies can restore some of their reputation with the public by acting speedily, and we expect them to do so.”

As an election now looks set for May 17, the PM made it clear that his government will not tolerate insurers ‘screwing’ their clients in the wake of the natural disaster in south-east Queensland and northern NSW. “We are hoping, of course, that they do the right thing,” the Prime Minster said. “If not, we’ll give consideration to any measures that are required, but we want insurance companies to do the right thing. People take out insurance expecting that they’ll receive support when they need it.”

According to the Daily Telegraph, Treasurer Jim Chalmers has talked to CEOs of our major insurers and outlined that the government expected “that claims be processed and paid out swiftly”.

To be fair, this isn’t just an action by a government behind in the polls but is a consequence of a parliamentary inquiry that concluded that insurers had “failed” those who thought they were insured and would be properly and fairly compensated after the 2022 floods in northern NSW, in places such as Lismore.

The Insurance Council of Australia says its members have improved their practices following the Parliamentary Flood Inquiry, but words are cheaper than actions, so insurers are facing a test. Effectively, the Government has declared that it will be a hard marker.

Interestingly, one of our biggest insurers — IAG – saw its share price rise 1.7% yesterday, when the overall market was up only 0.18%. This could be either because after natural disasters, insurance companies tend to raise premiums or because the PM’s warning came too late for the stock market to react.

In August last year, the Albanese Government set its sights on Woolworths and Coles for price exploitation, as cost-of-living fears escalated. The share prices of both companies fell. See how Woolworth’s share price slumped.

Woolworths (WOW)

The company had a $36 plus share price. Today it’s $28.54. This is a lesson that insurers should well heed.