THURSDAY’S SUMMARY: Suncorp 'put vulnerable family at risk’

Suncorp was full of apologies at the Hayne royal commission today, after leaving a vulnerable family in an unsafe property and trying to fob them off with a cash settlement way below their proper entitlement.

Worryingly for Suncorp, the sorry saga is unlikely to be a one-off. The commission heard that in 2016 the Financial Ombudsman Service (FOS) determined Suncorp had “definite systemic issues” with complaints handling, claims handling and responding to FOS determinations.

Bernadette Heald, whose home in NSW’s Hunter Valley was damaged in a severe storm in April 2015, told the commission she was insured with Suncorp and filed a claim by telephone the day after the storm.

A Suncorp-appointed engineer recommended repairs and a $30,000 cash settlement was offered.

Ms Heald said the family did not accept this, as they believed the house was damaged beyond repair, and in fact was unsafe to live in.

Ms Heald’s children were vulnerable - her son has a heart condition and her daughter suffers from anxiety.

She struggled to contain her emotion as she described trying to reassure her daughter as bricks began cracking around them. She said she “begged” Suncorp to move them to temporary accommodation, but this did not happen for many months.

The Healds complained to Suncorp about their treatment and insisted on another engineers’ report, which found the house was “slowly disintegrating”.

They received an apology for the handling of the claim but the cash settlement offer remained, and the family took a complaint to FOS.

Eventually FOS determined that the house did require a complete rebuild, and that Suncorp should pay the Healds $744,000. The family is still in temporary accommodation and their home will not be finished until next year.

Ms Heald says Suncorp knew she was in an unsafe house with two special needs children, and this was allowed to continue for two and a half years.

“It was really tough,” she said.

“We had home and contents insurance like you’re supposed to. You’re entitled to have a safe house and that's what you have insurance for.”

Suncorp CEO Insurance Gary Dransfield had the unenviable job of accepting responsibility for the errors and attempting to explain what went wrong.

He sincerely apologised to the Healds, and says the company has learnt many lessons. He said total replacement was rare following this storm, and that the insurer got into “an entrenched position” that it found it hard to dig itself out of.

He accepted that in regards to this claim Suncorp breached the General Insurance Code of Practice in several areas. He also agreed that Suncorp was aware of Ms Heald’s children’s health concerns “from an early stage” in the claim.

Earlier in the day, Mr Dransfield was quizzed over cash settlements offered to Wye River claimants after the bushfires of December 2015.

Counsel Assisting Rowena Orr suggested customers were “pressured” into accepting settlements and said advertising about total replacement policies was misleading.

Suncorp had sent renewal notices to people whose homes had been destroyed in the fires, the commission heard.

“It was not appropriate and we should not have done that,” Mr Dransfield said, agreeing that it was conduct that fell below levels the community would expect.

Ms Orr raised a concern that ASIC is hindered in taking action over claims handling, due to an exemption in the financial services definition, and says there are moves to consider whether there should be changes.

The commission returns at 9am tomorrow, as does our special insuranceNEWS.com.au blog.