ASIC sues Hollard over claims handling failure

Hollard Insurance is being sued by the Australian Securities and Investments Commission over allegations of serious claims handling failures, including taking nearly three years to resolve an issue.

ASIC says it has initiated action in the Federal Court alleging Hollard breached its duty of utmost good faith in handling of the home building and contents insurance claim made by a couple in regional Victoria.

The insurance claim was made on 31 October 2021, two days after a major storm damaged the roof of their home, but the couple were made to wait 18 months for their claim to be rejected.

Hollard initially accepted the claim, then repeatedly delayed decisions about repairs, then took over nine months to initiate an inspection by a structural engineer and delayed providing temporary accommodation to the couple.

Hollard rejected the claim in late April 2023, relying on a non-expert opinion over prior expert reports on the cause of the damage. The couple rejected a modest cash settlement offer by Hollard and lodged a complaint to the Australian Financial Complaints Authority (AFCA).

ASIC alleges that the combination of delays in decision making, poor communication and ignoring expert advice exposed the couple to unnecessary and prolonged harm, and breached Hollard’s duty of good faith in handling the claim, as implied by the Insurance Contracts Act.

ASIC Deputy Chair Sarah Court said, “In the end, because of the excessive delays by Hollard and the failure to undertake make-safe works, the home has become so riddled with moisture, mould and decay that it is uninhabitable and now needs to be demolished and rebuilt”.

“The egregious delay highlights ASIC’s concern about the significant rise in general insurance complaints reported to AFCA since the 2022 floods, particularly those involving claim delays. We are taking this case to send a clear message that delays of this magnitude are not acceptable and, in our view, are unlawful. The consequences of Hollard’s actions have caused significant harm to the policyholders who remain without their own home three and a half years later.’

ASIC is seeking declarations and a civil penalty in relation to s 13 of the Insurance Contracts Act.