An insurer must pay a factory fire claim after the industry ombudsman found it failed to prove the business’ owner deliberately lit the blaze.

Suncorp declined the claim under a “wilful acts” exclusion, saying the March 2024 fire at a small plumbing parts manufacturer was lit by the company’s GM or someone acting with his consent.

The fire destroyed stock and contents, and the business’ policy provided cover of more than $1.16 million.

The Australian Financial Complaints Authority has a maximum award of $631,500 plus interest, which the claimant has accepted.

The authority agrees the fire was deliberately lit and acknowledges “serious concerns” about the claim.

The GM was the last known person inside the building, and police regarded him as the prime suspect. The business’ CCTV camera was not working and there was an “apparent unexplained fault with the alarm system”, according to a loss adjuster’s report.

But AFCA says it was not given access to CCTV footage from adjoining buildings that the insurer had reportedly seen. This allegedly showed the GM entering, leaving and then returning to the building shortly before calling the police to report a fire.

An authority member said of the CCTV coverage: “I acknowledge its existence and likely importance in evaluating the loss.

“However, I consider its absence is problematic for the insurer’s view that the loss should not be covered.”

AFCA also found there was no apparent financial motive, with the business being profitable. Following the fire, the GM borrowed money and relocated rather than winding up operations.

Evidence of a forced door and cut perimeter fence were consistent with a break-in, and forensic investigators found no direct evidence linking the GM to the blaze.

AFCA said: “Where serious allegations are made ... the insurer is required to provide clear and cogent evidence to support its view. Inexact proofs, indirect testimony or speculation will typically not be enough to establish such allegations.”

The insurer must remove any reference to fraud from its records and withdraw any such representations to third parties.

See the ruling here.