An Australian Financial Complaints Authority (AFCA) decision requires an underwriting agency to pay maximum non-financial compensation and provide a detailed scope of works for a house fire claim after finding that it did not “adequately communicate” with homeowners.

The complainants said that they had not been “kept abreast” of works done to the home after lodging the claim in January last year and that they had not been provided with a start date for repairs. 

The property owners noted significant delays in Blue Zebra’s reimbursement for a temporary fence, which the agency later acknowledged as an “unfortunate administrative issue”.

They also told the hearing that a make-safe repair set up by the agency had failed to hold, causing water damage and mould.

Blue Zebra said the claim had been handled “in line with expectations associated to a loss of this significance and the number of experts required to be engaged”.

It said that repairs were authorised in July last year and were intended to commence once the homeowners agreed to reinstatement works, but could not proceed because of disagreements.

AFCA challenged the agency's assessment, saying that errors in its conduct and communication “caused undue delay and an interference with the complainants’ expectation of enjoyment or peace of mind”.

It highlighted “unexplainable delays” with the instalment of additional make-shift repairs after initial fixes had not worked. 

“The insurer says the complainants first raised concerns regarding this in April 2022. It says it only advised the complainants that it would not cover the additional brickwork in August 2022. It has not explained why it took this long to respond,” AFCA said.

The ruling acknowledged that the significance of the damage to the home and disagreements with the property owners would have affected Blue Zebra’s handling of the claim but found that its poor communication had been a leading cause for the delays.

“The insurer has not provided sufficient information to show the complainants caused delays in the progress of the claim,” AFCA said.

“Whilst there were some disagreements regarding the method of repair, the insurer has not addressed the complainants’ submission that the repairs could have commenced while this was addressed.”

AFCA agreed to award the complainants $5400 for non-financial losses, the maximum amount, for an “unusually high degree of stress and inconvenience”. It also required the agency to complete a full scope of works and a timeline for the repairs.

The insured also sought for Blue Zebra to reimburse them for a premium on a second contents policy they had purchased with a different insurer after they said that Blue Zebra agreed to cover it.

AFCA acknowledged that claim notes showed that Blue Zebra had been willing to “review and consider the reimbursement of this premium,” but said that it was unclear whether it had agreed to the arrangement.

“The complainants chose to purchase a second contents policy and I cannot be satisfied, on balance, they were led to believe this would be covered by the insurer,’ AFCA said.

“I do not consider the insurer is required to reimburse the complainants for the second contents policy’s premium.”

Click here for the ruling.