The decision in Australian Securities and Investments Commission v Hollard Insurance Partners Limited [2026] FCA 1487 is not of direct application to emergency responders but I thought it would interest readers and particularly those in the SES. 

The traditional rule in contracts is ‘caveat emptor’ – let the buyer beware. Insurance contracts however are said to be contracts ‘uberrima fides’ that is ‘in utmost good faith’.  Everyone has to upfront and honest with each other; with significant implications if that is not honoured, as Hollard Insurance discovered. 

Hollard’s customers took out a home and contents insurance policy. The policy covered loss and damage caused by storm and up to 52 weeks alternative accommodation ([15]-[16]). On 29 October 2021 the insured’s property was hit by a storm that impacted ‘parts of South Australia, Victoria and Tasmania’ (17]-[18]). An insurance claim was lodged on 31 October.  The details of what happened are set out at [28]-[29]:

ASIC has alleged, and Hollard has admitted, that Hollard failed to comply with the duty implied into the Policy by s 13(1) of the Act — requiring Hollard to act towards the Insureds with the utmost good faith in respect of their claim for indemnity under the Policy in relation to damage caused by the storm — and thereby contravened s 13(2A) of the Act.

The admitted single contravention is constituted by the following acts or omissions by Hollard:

(a) between 15 November 2021 and 26 July 2022, failing to engage promptly a structural engineer for expert opinion in assessing the damage caused by storm to the roof of the Insureds’ home;

(b) between 25 February 2022 and 12 October 2022, failing to assess correctly, and delaying in rectifying its mistake, as to the extent of the boundary fence which needed to be repaired;

(c) between 31 May 2022 and 27 June 2022, delaying in arranging further emergency works to the Insureds’ home, to protect the building against further loss or damage, after being notified that the original make-safe works had failed to stop water ingress;

(d) between early 8 September 2022 and 31 March 2023, delaying in providing temporary accommodation to the Insureds;

(e) between 5 October 2022 and 28 April 2023, failing to consider sufficiently two written expert reports and an inspection report prepared by Hollard’s appointed claim manager that were relevant to the decision to offer a cash settlement for the damage to the external roof caused by the storm;

(f)  between 5 October 2022 and 28 April 2023, failing to communicate in a sufficiently clear manner in writing with the Insureds about the reasoning and basis for the decision to offer a cash settlement for the damage to the external roof caused by the storm, and the value of the cash settlement that was offered in relation to that damage; and

(g) between 4 November 2022 and 31 March 2023, delaying in providing repairs to address growing mould.

ASIC sought a civil penalty from the insurer for breach of the Insurance Contracts Act 1984 (Cth). The only issue before the Federal Court was the appropriate value of the penalty.  Button J said (at [1]):

The Applicant (ASIC) said the penalty should be $30 million. Hollard said the penalty should be between $100,000 and $300,000. The gulf between these positions is patent. It reflects the parties’ diametrically opposed views of the seriousness of the contravening conduct and the quantum required in order for the penalty to serve the purposes of specific and general deterrence.

Her Honour went through the details of the conduct of the insurance company. I need not repeat them all but at [143] she said:

I accept that, as alleged by ASIC and admitted by Hollard, Hollard breached its duty of utmost good faith by the combined conduct identified by the parties … In those respects, the way in which Hollard handled the Insureds’ claim fell well short of the basic level of fairness and reasonableness that community standards of decency and fair dealing require of an insurer in Hollard’s position. Several of the combined elements of conduct involved Hollard delaying for extended periods of time in progressing steps in the assessment of the Insureds’ claim: Hollard delayed in engaging a structural engineer; it delayed in rectifying its mistake about the boundary fencing; it delayed in arranging emergency works as water ingress continued; it delayed in providing temporary accommodation; and it delayed in providing repairs to address growing mould. In other respects, Hollard failed in its approach to claims assessment and claims handling: it failed sufficiently to consider several reports, and failed to communicate clearly with the Insureds in relation to its cash settlement offer in relation to damage to the external roof.

Her Honour imposed a penalty of $2 million. She said (at [191]-[192]):

A penalty of $2 million is significantly lower than the figure ASIC proposed, and does not come close to the statutory maximum [of $81.6 million, )[4])]. I am, however, satisfied that it reflects the nature and circumstances of the contravening conduct and is sufficient to serve the purposes of deterrence, specific and general. I have also considered whether it is too high, as Hollard submitted. I do not think that it is. Although, as Hollard emphasised, the penalty is to be imposed in respect of a single contravention relating to a single policy, the contravention did not arise from a one-off bad decision, oversight or error. Rather, the contravention arose from conduct over an overall long period of time, and arose from multiple instances of lack of attention, delay and a lack of alacrity in progressing claims handling.

Insurers play a vital role in Australian society. The capacity for harm to come to insureds holding home insurance is particularly acute given the value of the home as an asset in many Australian households, and the power disparity between insurer and insured in progressing claims. It is incumbent on insurers to ensure that their claims handling accords with the duty of utmost good faith. Hollard’s contravening conduct here fell well short of that standard. A penalty of $2 million will send a message to insurers that the duty of utmost good faith is real; it is not an empty verbal formula. Rather, it is a substantive, and reciprocal, obligation between insurers and insureds. It is one that attaches to claims handling as much as other matters relating to the contract of insurance.

Apart from the $2million penalty, Hollard also:

…  paid the Insureds $1,545,538.13 in relation to their claim, including the $48,240 paid to the Insureds to cover their accommodation for the period 1 June 2025 to 31 December 2025. Hollard also paid over $243,000 to temporary accommodation providers on the Insureds’ behalf for the period between 31 March 2023 and 1 June 2025. The total amounts paid by Hollard exceeded the sums insured under the Policy of $1,003,322 ($822,054 for building losses and $181,268 for contents losses).

No doubt the final bill of $3.545 million plus legal costs, will not make a dent in Hollard’s profits.

This blog is a general discussion of legal principles only.  It is not legal advice. Do not rely on the information here to make decisions regarding your legal position or to make decisions that affect your legal rights or responsibilities. For advice on your particular circumstances always consult an admitted legal practitioner in your state or territory.