The corporate regulator alleges Hollard Insurance breached its duty of utmost good faith in its “egregious” handling of a home and contents claim made by a couple from regional Victoria.

The Australian Securities and Investments Commission has launched Federal Court action, seeking declarations and a civil penalty in relation to section 13 of the Insurance Contracts Act.

ASIC deputy chair Sarah Court says “excessive delays” by Hollard and a failure to undertake make-safe work mean the couple’s home is “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 ... We are taking this case to send a clear message that delays of this magnitude are not acceptable and, in our view, are unlawful.”

ASIC says Hollard took nearly three-and-a-half years to resolve the claim, which was lodged on October 31 2021 after a storm damaged the couple’s roof.

It says the couple were made to wait 18 months for their claim to be rejected in April 2023. 

After that determination by Hollard, the claimants turned to the Australian Financial Complaints Authority, which ordered the insurer to pay $10,800 in non-financial loss compensation and found the proximate cause of roof damage was the storm. Hollard subsequently agreed to pay a total cash settlement of more than $1.5 million. 

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

A Hollard spokesperson told insuranceNEWS.com.au it “acknowledges ASIC’s filing of proceedings... We support ASIC’s work in driving positive outcomes for consumers and are cooperating with ASIC in this matter. As this is an ongoing legal matter, we are unable to provide further comment.”

See ASIC’s concise statement to the court here.