The Federal Court has fined Hollard $2 million over failures handling a home and contents claim made by a couple after a storm damaged their roof.

The insurer breached of its duty of utmost good faith with significant delays rectifying mistakes, arranging emergency work and providing emergency accommodation, and it also failed in its communications, the court says.

“The saga experienced by the insureds was extended and must have been stressful and traumatic,” Justice Catherine Button said in a decision delivered today. “They were given the runaround in more ways than one, and lived in their ever-deteriorating home, as the saga wore on.”

The Australian Securities and Investments Commission says that despite initially accepting the roof claim after the October 2021 storm, Hollard delayed for 15 months and then rejected it.

The couple’s home in regional Victoria became riddled with moisture, mould and decay.

ASIC chair Sarah Court says the court has ordered the first civil penalty against an insurer for breaching its duty of utmost good faith, and it sends a warning to others about the devastating impact poor claim handling and prolonged delays can have on consumers.

ASIC chair Sarah Court

“Hollard’s serious claim handling failures left a family in limbo for years and living in a home that was uninhabitable,” she said.

“When Australians make an insurance claim, they are often facing some of the most difficult times in their lives.

“This decision confirms that insurers must act fairly, communicate clearly and make decisions without unnecessary delay, and must put their customers first.”

Hollard says it acknowledges the Federal Court’s findings in relation to a single claim under section 13 of the Insurance Contracts Act.

“We extend our deepest apologies and sincerely regret the impact of this experience on the customer,” a spokesperson said. “We recognise that, at the time, we fell materially short of our obligations in the handling of this claim.

“Hollard has made significant improvements to claims handling, and we remain committed to investing in ongoing improvements.”

The insurer says it supports ASIC’s work driving positive outcomes for consumers and has co-operated with the regulator throughout the matter.

ASIC had sought a penalty of $30 million. Hollard, which admitted it failed to comply with its duty, had argued the penalty should be between $100,000 and $300,000.

See the judgment here.