Business & Finance
ASIC finds Australian home insurers' cash settlements leave cyclone-impacted homeowners facing repair cost shortfalls
A review by the Australian corporate regulator found insurers settled over 63% of Cyclone Jasper claims in cash, often basing payouts on discounted builder quotes customers could not match.
The short version
- An Australian Securities and Investments Commission (ASIC) review of Cyclone Jasper claims revealed that home insurers overwhelmingly relied on cash payouts rather than direct repair management.
- More than 63% of final claims were settled with cash, frequently based on a single discounted quote from an insurer's preferred contractor.
- ASIC warned that the practice leaves vulnerable homeowners responsible for managing repairs, managing cost overruns, and paying out-of-pocket differences.
Key facts
- ASIC reviewed Cyclone Jasper home building insurance claims involving major insurers IAG, AAI, QBE Insurance, Allianz Australia, and Sure Insurance.[The Guardian]
- Cash settlements were utilized in more than 63% of finalized claims, with IAG and Allianz using full or partial cash payouts in over 80% of cases.[The Guardian]
- Insurers typically based cash offers on a single quote from preferred suppliers whose discounted rates were not accessible to individual homeowners.[The Guardian]
- ASIC found that four of the five insurers examined had flawed processes for identifying and helping vulnerable policyholders.[The Guardian]
- The report identified no legal breaches but urged insurers to base cash settlement sums on realistic market prices rather than discounted supplier rates.[The Guardian]
What remains uncertain
- The exact number or percentage of policyholders who suffered personal financial losses due to cash settlement shortfalls was not specified in the ASIC review.[The Guardian]