A poultry farmer has secured a $100,000 increase to a storm-related business interruption payout, after the complaints authority found their insurer mishandled the claim and failed to justify a lower offer. 

The dispute centred on a previously disputed claim over property damage and business interruption caused by the 2012 storm. The wild weather impacted a breeding shed, which affected the farmer’s ability to supply chickens to its buyer. 

Hollard Insurance offered the complainant $35,000 to settle the business interruption, but the complainant rejected the offer.  

The farmer referred to findings from its forensic accountant, who published three separate reports detailing business operations, income generated, and the impact of the claimed event.  

The accountant said there was a $136,339 difference in the business’ combined operating profits from 2010 and 2011 (the two years before the event) compared with 2012 and 2013 (following the storm event). 

The Australian Financial Complaints Authority panel noted that the accountant’s approach "deviated slightly” from the approach set out in the policy, which is based on income changes in the 12 months immediately after the event.  

The accountant said its approach was appropriate as the poultry industry operates on a two-year cycle. 

Hollard said the accountant left out relevant material in its analysis and incorrectly “focuses on the apparent impact on bottom line net profit rather than on reduction in turnover related to the insured event and any associated increased costs of working”.  

AFCA acknowledged the insurer’s criticism but said this alone was insufficient to prove the calculations were incorrect.  

“In order to justify its position, the insurer must do more than merely object,” the ruling says. 

“It must explain the basis of its objections and criticisms of the complainant’s calculations, and it must also demonstrate how its position is to be preferred.  

“The panel is of the opinion the insurer failed to do so. Indeed, the panel is of the opinion that much of the confusion and delay surrounding this claim (and complaint) has been due to the insurer’s failure to explain what was needed and why.”  

AFCA said the $136,339 figure was a fair assessment of the business interruption loss, requiring the insurer to pay interest from August 2022 until the settlement is reached.  

It agreed the insurer had mismanaged the claim by failing to consider the complainant’s expert evidence.  

It says the insurer’s decisions caused unnecessary delays in the claims process that resulted in additional “undue stress and anxiety”, and ordered the insurer to pay $3000 in compensation. 

“In general, the insurer dismissed the complainant’s submissions and supporting information without providing reasonable explanations to substantiate its concerns,” the panel said. “This, in turn, led to unnecessary and avoidable delays in the processing of the claim.”  

The ruling also ordered Hollard to cover the cost of the complainant’s expert, up to $10,000.  

Click here for the ruling.