WEDNESDAY’S SUMMARY: Youi’s post-disaster claims disasters

Youi’s deficient claims-handling after natural catastrophes was laid bare at the Hayne royal commission today.

Two of the insurer’s customers detailed a disastrous series of events that left them vulnerable and exposed.

Repairs to the claimants’ properties were botched, with incompetent builders used and complaints brushed off as “over-dramatising”.

COO Claims Services Jason Storey admitted that in both cases Youi failed to comply with the General Insurance Code of Practice, as well as the duty to act with “utmost good faith”.

He also confirmed that an internal review of Youi’s complaints process found it to be non-compliant and requiring significant improvement.

Customer Sacha Murphy took to the witness box to highlight problems she had getting her Broken Hill home repaired after it was damaged in a severe hailstorm in 2016.

The family was left with an exposed roof, no air-conditioning and a range of other problems.

The commission heard that Youi appointed a builder who had been the subject of a number of previous complaints. In fact, Youi had suspended the builder from its approved panel but still allowed him to continue with the job at Ms Murphy’s property.

Counsel Assisting, Rowena Orr, said Youi’s agreement with the builder required him to start work within 10 days of the scope of works being signed and the excess being received. However, the builder did not start work for another four months.

Ms Orr asked what Youi did during this delay.

“I don't think Youi did enough, Ms Orr,” Mr Storey said.

Youi also failed to address concerns that Ms Murphy and her family were exposed to potential lead contamination, Ms Orr says.

Ms Murphy flagged on October 6 that her roof was open and that she was pregnant and could be exposed to lead dust, a recognised issue in Broken Hill.

Nothing was done until October 9. Ms Murphy’s family was moved to temporary accommodation for four nights, but on return the roof was still not fixed.

Ms Murphy sent a detailed six-page complaint letter to Youi but the insurer's response was inadequate, Ms Orr said.

She said the roof was finally repaired in May this year - 18 months after the damage was caused. A different builder was used to carry out the repairs.

Youi also came under fire for its handling of damage to a home in Airlie Beach in Queensland after Cyclone Debbie in March last year.

Glen Sutton says he and his wife felt bullied and intimated during the process, initial make-safe works were totally inadequate, the repair process was terrible and handling of temporary accommodation also atrocious.

He said a tarpaulin was not immediately put over the roof after the cyclone and the covering eventually put in place was inadequate and allowed water to flood into the house, causing further problems.

“The moment you walked in to the house you could smell mould,” he said.

An initial scope of work report was inadequate, causing Mr Sutton to insist on an engineers report that recommended total replacement of the roof.

Mr Sutton says he is still not back in the home, and “there is no timeframe” for when that might be possible.

“It has been mishandled from the beginning,” he said. “It is an absolute shambles.”

Internal Youi emails revealed a loss assessor accused the Suttons of “over-dramatising” in order to gain more than they were entitled to.

Mr Storey accepted such language about an insured was not appropriate.

He says a chief customer officer has recently been appointed and his “first priority” will be to address the findings of the review into the complaints process.

Earlier in the day, IAG’s EGM Business Distribution and Group Executive Ben Bessell was quizzed over the sale of add-on insurance for vehicles.

Counsel Assisting, Mark Costello, put Mr Bessell under pressure over IAG-owned Swann Insurance’s oversight of authorised representatives selling add-on products through motor dealerships.

Mr Bessell accepted the oversight process provided a “light touch”, there had been a lack of face-to-face audits and that Swann could not be certain that ARs were following correct procedures in their dealings with customers.

Mr Bessell says Swann has halted the sale of the add-on products through dealerships due to the issues in the market and as the group focuses on its “customer-centric” approach.

Swann expects to complete its remediation payments to consumers by January 31 next year. It is currently about halfway through the process.

The hearings resume at 9.30am tomorrow morning, and insuranceNEWS.com.au will continue to keep you informed via our live blog.