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Insurers kick back at royal commission allegations

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Suncorp has defended its handling of Wye River and Hunter Valley catastrophe claims after the Hayne royal commission suggested misconduct and behaviour below community expectations.

As reported in a Breaking News last Wednesday, Youi, IAG and Allianz also defended their positions in submissions after they were alleged to have mishandled claims, mis-sold automotive add-on insurance or disregarded the need for compliance.

The Wye River case study centred on complete replacement cover and suggestions that Suncorp had been misleading or deceptive in advertising that its subsidiary AAMI would rebuild or repair homes no matter the cost.

The Suncorp submission says it’s clear in its product disclosure statements that claims may be cash-settled based on what it would cost the company to complete the works, and there is no blank cheque.

“Reasonable consumers can be expected to have some degree of common sense and some grasp of practical realities,” the submission says.

Suncorp says it did not ignore Australian Securities and Investments Commissions concerns when it launched a new advertising campaign while previous versions were being investigated, as it believed the material was appropriate.

The insurer also denies breaching the duty to act with utmost good faith in the handling of a claim that saw a vulnerable family left in an unsafe property in the Hunter Valley.

The submission concedes it breached the General Insurance Code of Practice, but notes the claim was complex and came when a series of natural disasters had strained its resources.

Suncorp clarifies that it doesn’t acknowledge “broader systemic issues”, as suggested by Counsel Assisting the royal commission, as comments during evidence related to a narrow Financial Ombudsman Service definition.

Youi also says neither of the two case studies involving the company that were aired before the royal commission support findings of misconduct or conduct below community standards and expectations.

It says the royal commission did not provide sufficient context, such as existing building problems, limitations on availability of suitable tradespeople in remote areas and high claim volumes.

“These two case studies are not only unrepresentative of the vast majority of cases dealt with by Youi, particularly following natural disasters, but are case studies which counsel assisting has sought to portray in the worst possible light,” the submission says.

“No attention was given to the many claims that were dealt with in an outstanding manner by Youi in difficult circumstances or the care and attention that Youi tried to bring to those affected by these events.”

Youi says unacceptable delays in completing works did not contravene the code of practice, and it is necessary to look at the handling of a claim “as a whole”.

IAG says its Swann subsidiary did not engage in misconduct in relation to the sales of add-on insurance but concedes the commission could find conduct fell short of community standards and expectations.

“A substantial part of the problem with Swann’s conduct related to the industry-wide problem of commissions in add-on insurance,” it says.

Allianz accepts it is open to the commission to find that it engaged in misconduct in relation to misleading content that was allowed to sit on its website for many years, and agrees it may have breached the Corporations Act in failing to report breaches to ASIC. But it disputes other misconduct allegations.

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