ASIC has commenced proceedings in the Federal Court 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.
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.
ASIC is seeking declarations in relation to s13 of the Insurance Contracts Act.
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.
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.
Youi was an Insurance Case Study detailed in the Financial Services Royal Commission Volume 2 Final Report (page 415).