The Australian Financial Complaints Authority says a broker breached its duty of care to landlord policyholders when it communicated instead with their tenants, but it has rejected a collusion allegation and ruled against a premium refund.

The landlord complainants said the tenants and Resilium Insurance Broking made inaccurate policy changes without their knowledge or consent, which meant cover was void for 19 months and three days. They said from November 2020 they did not receive renewal documents, which were sent to the tenants. Policy corrections were made in July 2022 after they became aware of the issues.

Concerns included that brick walls and a steel roof were listed as concrete, an old alarm system was added to the policy and glass cover removed. The complainants suggested collusion to reduce the premiums payable by the tenants, who were liable for the amount under the lease agreement.

The broker said it started communicating with the tenants at the start of the policy. The tenants advised on November 16 2016 that they had the landlord’s authority to gain an alternative quote and on November 21 confirmed the landlord had authorised them to go ahead with the policy.

One of the landlords contacted the broker in May 2018 to provide contact details and request a copy of the certificate of insurance, and indicated that as long as the tenants were paying the premium and the property was insured, he was OK with cover being arranged with the tenants, the broker said.

The broker said it was not aware roof details were incorrect, with the material noted as concrete at the policy start. The walls were listed as concrete from 2020 due to a data entry error when the policy was transferred between systems.

The broker contested other issues raised. It said a claim, if it had been lodged, would not have been denied based on the building material errors, and the complainant had not suffered any loss.

AFCA says the broker breached its duty by failing to communicate with the complainants regarding terms and changes, and in allowing the tenants to make alterations without the landlords’ consent. It failed to note the correct building materials and the status of the alarm, and there were general failures in communication and supplying documents to the complainants, the authority says.

“While I understand the tenants arranged the initial quotation and there appeared to be consent from the complainants for these arrangements, which caused some confusion as to the correct contact, the broker is held to the same standard as any professional person,” an AFCA adjudicator says. “I consider the broker’s conduct has fallen short of that standard in the circumstances.”

The decision, substantially in favour of Resilium, says there is insufficient evidence the broker and the tenants colluded. AFCA does not accept the policy would have been void if there had been a claim, and says no loss was shown due to the duty breach.

“I also note the complainants did not pay the policy premiums, they were paid by the tenants who were liable for the premium amount under the lease agreement. The complainants say there are some premium amounts still owing to them by the tenants. However, the complainants retain a right to recover this amount from the tenants under the lease agreement.”

AFCA also rejects the suggestion the broker’s actions caused a relationship breakdown between the landlords and the tenants, who are in dispute over other matters.

The broker has been ordered to pay $1000 compensation for non-financial loss, although AFCA does not accept the breach caused the extent of ill-health outlined by one of the complainants. 

“Despite this, I accept the breach has caused the complainants interference with their expectation of peace of mind. The information shows they had genuine concerns about their exposure to risk upon learning changes had been made to the policy without their knowledge.”

The decision is available here.