In Australian Securities and Investments Commission v Hollard Insurance Partners Limited [2026] FCA 1487, the Federal Court of Australia ordered Hollard to pay a $2 million penalty after Hollard admitted that its serious claim-handling failures resulted in Hollard breaching its duty of utmost good faith because of significant delays, poor communication and other failings in handling a home insurance claim by a family in regional Victoria, following a storm in October 2021 that damaged their home. The home was ultimately deemed a total loss.
Despite initially accepting the claim for the home’s damaged roof, Hollard delayed for 15 months before settling the claim.
Hollard admitted that it failed to comply with the Insurance Contracts Act 1984 (Cth) by a combination of:
(a) failing to promptly engage a structural engineer for expert opinion in assessing the damage caused by storm to the roof of the Insureds’ home;
(b) failing to assess correctly, and delaying in rectifying its mistake, as to the extent of the boundary fence which needed to be repaired;
(c) delaying in arranging further emergency works to the Insureds’ home, to protect the building against further loss or damage, after being notified that the original make-safe works had failed to stop water ingress;
(d) delaying in providing temporary accommodation to the Insureds;
(e) failing to sufficiently consider two written expert reports and an inspection report prepared by Hollard’s appointed claim manager that were relevant to the decision to offer a cash settlement for the damage to the external roof caused by the storm;
(f) failing to communicate in a sufficiently clear manner in writing with the Insureds about the reasoning and basis for the decision to offer a cash settlement for the damage to the external roof caused by the storm, and the value of the cash settlement that was offered in relation to that damage; and
(g) delaying in providing repairs to address growing mould.
In determining the penalty to be imposed, Justice Button proceeded on the basis that the combined conduct constituted a single contravention.
He accepted Hollard’s submissions that the changes it has made significantly reduce the possibility of the multiple failings that occurred in the handling of the Insureds’ claim recurring.
Justice Button observed:
“The saga experienced by the Insureds was extended and must have been stressful and traumatic. They were given the runaround in more ways than one, and lived in their ever-deteriorating home, as the saga wore on. The Court is not imposing a penalty to reflect everything the Insureds experienced; what the Insureds experienced in its totality cannot be substituted for the contravening conduct for which the civil penalty is to be imposed. Nor is the Court imposing a penalty reflecting every aspect of Hollard’s conduct at which one might look askance….
A business that identifies issues and takes steps to address them without the pressure of regulatory enforcement action prompting the change is, in my view, a business less in need of specific deterrence than a business driven to make changes by the pressure of litigation….
While significant improvements have been made in claims handling, there is always the risk of back-sliding, and the penalty imposed will serve to deter Hollard from tolerating any such back-sliding as would allow similar failings in claims handling to occur in the future.”
If you found this article helpful, then subscribe to our news emails to keep up to date and look at our video courses for in-depth training. Use the search box at the top right of this page or the categories list on the right hand side of this page to check for other articles on the same or related matters.
Author: David Jacobson
Principal, Bright Corporate Law
Email:
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
