Between a A$2 Million Fine and A$2.3 Billion in Revenue: The Accountability Imbalance Behind Australia's Largest Insurer's Mishandled Claim

According to a report by the Australian Broadcasting Corporation (ABC) News, the Australian Federal Court has imposed a A$2 million fine on private insurance giant Hollard, finding that it seriously breached the duty of utmost good faith in handling a home insurance claim from a couple following a storm in October 2021, a delay that ultimately left their Victorian country home uninhabitable.

ASIC filed the lawsuit in April last year. The grounds cited by the court included failing to assess the damage in a timely manner, delaying remediation works, failing to properly protect the property from further damage, taking too long to find temporary accommodation for the couple, disregarding expert reports, and inadequate communication throughout the process. ASIC noted that when the company rejected the claim in April 2023, its decision was not based on expert opinion, despite prior expert reports having documented the damage.

ASIC Chair Sarah Court said this was the first civil penalty imposed on an insurer for breaching the duty of utmost good faith. She warned that Hollard's mishandling of the claim had left a family trapped for years, living in a home that had become uninhabitable. Court stressed that Australians are often at their most vulnerable when they lodge insurance claims, and that insurers must act fairly, communicate clearly, make decisions without delay, and put customers first.

However, the stark disparity between the fine and the company's size reveals a deep-seated imbalance in accountability mechanisms within the financial sector. Hollard is one of Australia's largest private insurers, underwriting motor, home, property, pet, and commercial lines. It is the underwriter behind CBA's insurance products, Everyday Insurance, Real Insurance, Australian Seniors, and Steadfast. In 2024, the company's estimated annual revenue was approximately A$2.3 billion — meaning the A$2 million penalty amounts to less than a single day of revenue. ASIC's legal costs are separate. The court also ordered Hollard to pay the fine into the Australian federal government within 28 days.

The timeline of this case highlights the institutional disadvantage that ordinary consumers face when dealing with large financial institutions. After the October 2021 storm damaged the roof of their home, the couple lodged their claim two days later. Hollard initially accepted the claim but repeatedly delayed inspections, reports, and repairs. By the end of 2022, the insurer offered the couple only a A$1,000 "goodwill payment" in an attempt to settle the claim. After rejecting the claim in April 2023 based on non-expert opinion, the couple complained to the Australian Financial Complaints Authority (AFCA). It was only after AFCA determined that the storm had caused structural damage to the roof that Hollard agreed to pay the couple more than A$1.5 million in cash compensation plus temporary accommodation costs — by which time several years had passed since the storm. ASIC only filed the lawsuit against Hollard after the cash settlement was reached.

In the judgment, the presiding judge wrote: "The events experienced by the insured persons, which dragged on and on, must have been extremely stressful and painful. They were fobbed off in every respect, and over time the condition of the home in which they lived continued to deteriorate."

A Hollard spokesperson, in a statement to ABC, said the company accepted the Federal Court's findings, "offered the deepest apology to the customer and sincerely regretted the impact this experience had on them. We acknowledge that, at the time, in handling this claim we materially failed to fulfil our obligations."

When ASIC filed the lawsuit against Hollard last year, it alleged that the combination of decision-making delays, poor communication, and disregard for expert opinion had caused the couple unnecessary and prolonged harm. ASIC argued that the non-expert opinion on which Hollard relied to reject the claim contradicted multiple prior expert reports that had documented the damage. ASIC's allegations were ultimately upheld in full by the court.

For a company with annual revenue of approximately A$2.3 billion, the A$2 million fine carries more of a symbolic regulatory signal than any substantive economic constraint. Although this is the first civil penalty imposed on an insurer for breaching the duty of utmost good faith, for a couple who had to wait years for a fair resolution after their home was damaged, the size of the fine is unlikely to constitute an economic incentive that changes industry behaviour.