A general insurer has been ordered to pay $100,000 for a significant code of practice breach related to failures in the handling of customer claims and complaints.

The financial sanction is only the second imposed by the Code Governance Committee and is double the previous penalty. The committee this time has not named the insurer. 

The issue affected 35 customers, including 22 hit by severe weather events that were declared catastrophes by the Insurance Council of Australia.

“When customers turn to insurers for help during times of crisis, they have the right to expect timely, effective and fair support. This insurer fell well short of that expectation,” code committee chair Veronique Ingram said. 

The committee says operational changes led to confusion and a breakdown in processes and accountability, resulting in delays and ineffective repairs that prolonged hardship for many customers. A failure to address complaints compounded the harm.

One customer had to make 12 complaints before their issues were addressed, revealing significant deficiencies in how the insurer handled complaints.

The insurer has paid $1.2 million in compensation to affected customers, has completed repairs and claims settling, and has conducted a “comprehensive review” to address systemic claims handling process issues.

The sanction notice says from October 2023 to November 2024, the insurer reported significant breaches of its claims management and complaints handling obligations under parts 8, 9 and 11 of the code.

The code committee says its decision not to name the insurer in the sanction reflects the company’s “proactive and effective response” to the breaches, and its co-operation, transparency and accountability in addressing the harm caused. 

“For these reasons, we decided that the publication of a de-identified case summary, without publicly naming the insurer, was appropriate,” the notice says.

“This recognises the insurer’s model response and encourages other insurers to respond as comprehensively and effectively when identifying, reporting and addressing breaches.” 

The $100,000 sanction is imposed through a community benefit payment, which will be given to a charity.