In a rare move, ASIC has begun proceedings in the Federal Court against an insurer for alleged breaches of its duty of utmost good faith.
A statement from ASIC says it has begun proceedings against Youi Pty Ltd (Youi) “… for alleged breaches of the Insurance Contracts Act 1984, in relation to Youi’s duty of utmost good faith in handling a building and contents insurance claim made by a policyholder”.
ASIC states the policyholder first made an insurance claim in January 2017 following a severe hailstorm in their home town of Broken Hill in November 2016.
“ASIC alleges that Youi failed to meet the standard imposed by the duty in handling the claim as it took nearly two years to settle, with the repairs to the home finally being completed in November 2018.”
It says it is seeking declarations in relation to section 13 of the Insurance Contracts Act, which requires both parties to an insurance policy to act towards one another in respect of any matter arising under or in relation to the insurance contract with the utmost good faith.
The regulator explains that “…at the time that this conduct took place, the Insurance Contracts Act did not impose any pecuniary penalties for a breach of the duty of utmost good faith, and so in these proceedings ASIC seeks declarations that Youi breached the duty”.
“On 13 March 2019, the law was changed so that for any conduct in breach of that duty after that date ASIC may also seek pecuniary penalties.”
The regulator is also reminding the sector of draft legislation which, if passed, will include claims handling under the definition of financial services:
“Earlier this year the Government also consulted on Exposure Draft legislation to regulate insurance claims handling as a financial service. If passed, these changes will enhance ASIC’s ability to promote fair, transparent and timely claims handling.”
Taking 3 months to resolve a general insurance claim is a joke. That is my experience right now with Suncorp. All GI insurers are now using out of town estimators to keep costs down if they choose to offer cash settlements.. If the customer elects to accept the in-house estimators quote and have the work done by the estimator, the client then has trouble with the estimator-provided subbies, with huge delays in effecting repairs, and risking the Dodgy Brothers not doing the job properly because they are being forced to accept lower payment by the estimating mob.
More power to ASIC on this matter.
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