The Federal Court has ordered Hollard Insurance Partners Limited to pay an AUD 2 million penalty in proceedings brought by the Australian Securities and Investments Commission. Hollard admitted that extensive delays, poor communication and other failures in handling a storm damage claim breached its duty of utmost good faith. The outcome is the first civil penalty imposed on an insurer for breaching that duty. Hollard initially accepted the October 2021 claim for roof damage but waited 15 months before rejecting it. A recommended structural engineering assessment was not completed until August 2022, and Hollard did not make a final decision until April 2023. During the prolonged process, delays also affected temporary accommodation, while moisture, mould and decay made the family’s home uninhabitable and ultimately a total loss. The insurer initially offered AUD 1,000 to settle the claim in late 2022. It ultimately paid AUD 1.55 million, including payments reflecting the home’s total loss, but took more than three years from lodgement to finalize those payments. The ruling reinforces that insurers must handle claims fairly, communicate clearly and make decisions without unnecessary delay.
Australian Securities and Investments Commission secures AUD 2 million penalty against Hollard in first insurer civil penalty for breaching duty of utmost good faith
The Federal Court ordered Hollard to pay AUD 2 million after it admitted serious claims handling failures breached its duty of utmost good faith. The case is the first civil penalty against an insurer for such a breach. Hollard took more than three years to finalize payments as the insured family’s damaged home deteriorated and became uninhabitable.