Insurance giant Hollard has been fined $2 million for taking so long to process a home insurance claim that a house in regional Victoria became uninhabitable.
The corporate watchdog ASIC sued Hollard in April last year, alleging the insurer “breached its duty of utmost good faith” in its handling of a claim made by a couple in October 2021, two days after a storm damaged their roof.
The Federal Court ordered Hollard to pay $2 million for failing to promptly assess the damage, delaying rectification work and for failing to properly protect the property from further damage.
It was also found to have taken too long to find temporary accommodation for the couple, failed to consider expert reports, and not clearly communicate with the couple throughout the claims process.
Hollard has also been ordered to pay ASIC’s legal costs.
In a statement to the ABC, a spokesperson for Hollard said the insurer acknowledges the Federal Court’s findings initiated by ASIC.
“We extend our deepest apologies and sincerely regret the impact of this experience on the customer,” the spokesperson said.
“We recognise that, at the time, we fell materially short of our obligations in the handling of this claim.”ASIC says delays caused unnecessary and prolonged harm
Hollard is a privately owned insurance company and one of the largest in Australia, underwriting insurance for motor, home, contents, bicycle, pet, and business products.
It is the company behind brands including CBA’s insurance product, Everyday Insurance, Real Insurance, Australian Seniors and Steadfast.
In 2024, the company had an estimated annual revenue of about $2.3 billion.
Hollard initially accepted the couples’ claim, before repeatedly delaying inspections, reports and repair work, only to then reject the claim in April 2023.
ASIC said the rejection was based on a non-expert opinion, despite prior expert reports outlining the damage.
ASIC alleged the combination of delays in decision-making, poor communication and ignoring expert advice exposed the couple to unnecessary and prolonged harm.
Sarah Court says Hollard’s delays mean the home in regional Victoria needs to be demolished. (ABC News: Lincoln Rothall)
Its chair Sarah Court said the outcome was the first civil penalty ordered against an insurer for breaching its duty of utmost good faith.
She said it was a warning to insurers about the devastating impact poor claim-handling and prolonged delays can have on consumers.
“Hollard’s serious claim handling failures left a family in limbo for years and living in a home that was uninhabitable,” Ms Court said.
“When Australians make an insurance claim they are often facing some of the most difficult times in their lives.
“This decision confirms that insurers must act fairly, communicate clearly and make decisions without unnecessary delay, and must put their customers first.”
ASIC says decision sends clear message
The family was initially offered $1,000 from Hollard as a goodwill payment in late 2022 to settle their claim.
Once Hollard denied the claim, the couple then lodged a complaint with the Australian Financial Complaints Authority (AFCA), which determined the storm caused structural damage to the roof.
Hollard had an estimated annual revenue of about $2.3 billion in 2024. (Supplied)
Hollard then agreed to pay the couple a cash settlement of more than $1.5 million for the total loss of the building, as well as temporary accommodation.
ASIC sued Hollard after the cash settlement. The penalty Hollard has been ordered to pay goes to the Commonwealth of Australia, to be paid within 28 days.
In delivering the judgment the judge said: “The saga experienced by the insureds was extended and must have been stressful and traumatic.”
“They were given the run-around in more ways than one and lived in their ever-deteriorating home as the saga wore on.”