The Federal Court has ordered Hollard Insurance Partners Limited to pay a $2 million penalty for breaching its duty of utmost good faith, marking the first time a civil penalty has been imposed on an Australian insurer under this provision of the Insurance Contracts Act 1984.
The Australian Securities and Investments Commission (ASIC) brought the case after what it described as serious failures in Hollard’s handling of a home insurance claim lodged by a family in regional Victoria. The claim followed a storm in October 2021 that damaged the family’s roof.
Hollard initially accepted the claim. However, despite an inspection identifying the need for a structural engineering assessment, the insurer did not arrange one for approximately eight months. A final decision on the claim did not come until April 2023, roughly 15 months after the initial acceptance, when Hollard reversed course and rejected it.
Throughout that period, the family remained in the home as it deteriorated. Moisture, mould, and decay spread through the property, which was ultimately deemed a total loss.
Hollard admitted to extensive delays, periods of inaction, and poor communication, including delays in providing temporary accommodation.
In late 2022, the insurer offered $1,000 as a goodwill payment to resolve a complaint from the family. The family rejected the offer and escalated the matter to the Australian Financial Complaints Authority (AFCA). Hollard ultimately paid $1.55 million, including payments reflecting the total loss of the home, but took more than three years from the original claim lodgement to finalise those payments.
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Justice Button stated that the family “were given the runaround in more ways than one, and lived in their ever-deteriorating home, as the saga wore on.”
He added that several aspects of the insurer’s conduct were difficult to explain: “The failure to appoint an engineer for about eight months after the need for one was identified on the first inspection, the glacial progress of the claim handling while the Insureds’ house decayed around them, and the progress of mould growth, cannot be explained simply as the product of staff busyness or poor communication with suppliers.”
The court noted the “power disparity between insurer and insured in progressing claims” and the particular vulnerability of homeowners, given the value of the home as an asset in many Australian households.
ASIC chair Sarah Court said the penalty sends a message to insurers across the market. “Hollard’s serious claim handling failures left a family in limbo for years and living in a home that was uninhabitable,” Court said.
She added: “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.”
The case was brought under section 13(2A) of the Insurance Contracts Act 1984. That provision created civil penalties for breaches of the duty of utmost good faith.
Hollard holds a 4.4% share of the general insurance market and is the sixth largest householder insurer in Australia, with annual turnover of approximately $1 billion in each of 2024 and 2025. The company, formerly known as Commonwealth Insurance Limited (CommInsure), was acquired by Hollard Holdings Australia Pty Ltd in September 2022.
At $2 million, the penalty represents a fraction of that revenue. Hollard had not issued a public response to the penalty at the time of publication.
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The decision arrives amid a sustained regulatory focus on claims handling. ASIC has designated claims and complaints handling failures as an enforcement priority for 2026.
In June 2025, ASIC published findings from a review of seven insurers’ home claims processes. That review found that oversight of independent experts such as engineers remained weak, information provided to policyholders about cash settlements was often inadequate, and claims resourcing had not kept pace with rising volumes. The General Insurance Code Governance Committee (GICGC) recorded 29,021 breaches of Code obligations related to home insurance between July 2023 and June 2024, data ASIC cited in its review.
General insurance complaints to AFCA reached 34,231 in 2024-25, a 17% increase on the previous year.
The broker industry body launched an inaugural Claims Committee in August 2026, aimed at identifying systemic claims problems and reform opportunities. NIBA CEO Richard Klipin said at the time that “claims are where brokers earn client trust.”
For brokers, the Hollard ruling establishes a precedent that strengthens their position when advocating for clients caught in protracted claims. Brokers evaluating insurer panel partners may find the ruling, together with AFCA complaint trends and the Code breach data from the ASIC review, relevant to those assessments.
Insurance Business has contacted Hollard for comment. This article will be updated if a response is received.
Consumers who have a complaint about their insurer should first raise it through the insurer’s internal dispute resolution process. Unresolved complaints can be taken to AFCA for free, independent resolution.
