Hollard fined A$2M — first Australian insurer penalised for breaching good faith

After a storm damaged a regional Victorian family's roof in October 2021, Hollard Insurance Partners initially accepted their home insurance claim. Despite an inspection identifying the need for a structural engineering assessment, the insurer did not arrange one for about eight months. A final decision did not come until April 2023 — roughly 15 months after the initial acceptance — when Hollard reversed course and rejected the claim. Throughout, 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 it offered A$1,000 as a goodwill payment to resolve the family's complaint; the family rejected the offer and escalated to the Australian Financial Complaints Authority. Hollard ultimately paid A$1.55 million, including payments reflecting the total loss of the home, but took more than three years from the original lodgement to finalise those payments.

The Federal Court ordered Hollard to pay a A$2 million penalty for breaching its duty of utmost good faith — the first time a civil penalty has been imposed on an Australian insurer under that provision of the Insurance Contracts Act 1984. Justice Button said 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 conduct were difficult to explain: the failure to appoint an engineer for about eight months after the need was identified at the first inspection, the 'glacial progress of the claim handling while the Insureds' house decayed around them', and the mould growth — none of it 'simply the product of staff busyness or poor communication with suppliers'.

A$2 million Federal Court penalty — the first against an Australian insurer under the good faith provision; A$1.55 million paid to the family after three-plus years.

No structural engineer was appointed for about eight months after the first inspection identified the need for one.

An already-accepted claim took roughly 15 months to reach a decision while the house decayed around its occupants.

The goodwill response to a family living in a moulding, decaying home was an offer of A$1,000.

The delay itself produced the loss: a claim accepted for a roof repair ended as a total-loss payout.

An accepted claim is a promise under good-faith law: leaving it idle for eight months without an engineer turns a repairable roof into a total loss and a precedent-setting penalty.

The A$2 million penalty was handed down in October 2026, with Hollard admitting the extensive delays, inaction and poor communication. The A$1.55 million in payments to the family closed a claim that had run more than three years, and the ruling gives ASIC its first court precedent for penalising insurers directly over good-faith breaches in claims handling.