AFCA Rebukes IAG Over Mismanaged Flood Damage Claim
AFCA Rebukes IAG Over Mismanaged Flood Damage Claim
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
Insurance Australia Group (IAG) has been mandated to reexamine a denied claim and offer compensation to a driver whose "vulnerable status" was overlooked.
Following a flood incident in remote Northern Territory, the driver submitted a claim on March 9 last year after his car was trapped in the floodwaters. He was transporting a friend to retrieve her vehicle when the floodwater immobilized his Holden Commodore, valued at $32,000.
The driver reported significant water intrusion into the vehicle, compromising its engine and electronics. He and his passenger needed over 15 minutes to push the vehicle out from the water.
IAG arranged for the car to be transported to Darwin for inspection. In June, the mechanic’s report indicated no water damage to the engine or interior, yet traces of water were discovered in its oil.
Another mechanic’s assessment found no water in the air filters or throttle but noted rust corrosion, indicative of water presence.
Due to the claim being filed six days after the policy initiation, IAG flagged the claim's legitimacy and handed it over to their fraud investigation unit. The unit interviewed both the driver and passenger and demanded multiple documents, including mobile records, a car purchase contract, and service history.
According to the Australian Financial Complaints Authority (AFCA), the driver submitted all requested documentation with the exception of his bank statements. Unfortunately, his mobile phone records were not provided in the correct format.
The insurer contended that further investigation was contingent on receiving all requested information and upheld their decision to decline the claim pending additional data.
However, AFCA challenged IAG’s stance, arguing the driver had sufficiently complied with the investigation despite the missing documentation. The authority stated that evidence from the two expert reports supported the driver’s account of events.
The authority emphasized the presence of water in the vehicle, citing the seized engine, evident corrosion in all cylinders, the presence of surface rust, and the milky oil in the oil filter, all hinting at water contamination.
Additionally, AFCA criticized IAG for not recognizing the driver’s vulnerability, stemming from his remote residence, financial duress, and health issues, including a broken leg.
AFCA noted that the insurer's mishandling of the claim had caused avoidable stress and delays for the driver. Consequentially, IAG was compelled to pay a penalty of $5400 for non-financial losses.
"The insurer should either properly execute its investigation or make a claim decision based on the available information," AFCA stated. "Unreasonable demands for additional information have resulted in undue stress for the claimant. IAG must compensate him for the resulting inconvenience and emotional distress."
Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.
APRA’s latest general insurance data suggests the Australian insurance sector is operating on a steadier footing, with industry results supported by firmer underwriting discipline, investment returns and ongoing attention to capital strength. For consultants, that is broadly positive news: a healthier insurance market can help maintain capacity and give buyers more room to discuss cover options at renewal. - read more
Renewed regulatory and industry attention on falls from height is a timely warning for Australian builders, subcontractors and project managers. While falls are usually discussed as a work health and safety issue first, they also sit squarely inside the insurance conversation because a serious incident can trigger workers compensation claims, public liability exposure, contractual disputes, investigation costs and reputational damage. - read more
Recent general insurance results point to a sector that is in better financial shape than it was during the most intense period of claims inflation, severe weather losses and investment market volatility. Industry reporting on APRA data indicates that premium increases, stronger investment returns and more disciplined underwriting have helped Australian insurers rebuild margins, even as natural hazard risk and repair costs remain persistent pressure points. - read more
Recent fitness sector guidance has again put safe service delivery in the spotlight for personal trainers, particularly as more Australians mix gym-based sessions with outdoor training, small-group classes, online coaching and higher-intensity programmes. The message for exercise professionals is practical rather than alarmist: when client needs are more varied, the systems behind each session matter just as much as the workout itself. - read more
APRA’s operational risk standard, CPS 230, has shifted from a regulatory project into a practical benchmark for banks, insurers and superannuation trustees. For insurance customers, the change is not just about compliance language. It goes to whether an insurer can keep essential services running when technology fails, a supplier breaks down, a cyber incident occurs or a major weather event drives a surge in claims. - read more
Financial planning is a crucial aspect of personal finance, enabling individuals to manage their money effectively and achieve their financial goals. For homeowners, financial planning takes on even greater significance. It involves not just handling your income and expenses, but also protecting valuable assets like your home and possessions. - read more
Choosing a sum insured is one of the most important parts of arranging home and contents insurance. This guide explains the difference between rebuild cost, market value and contents value, how underinsurance can happen, and how Australians can review their cover more confidently. - read more
Choosing the right home insurance policy is akin to laying a safety net beneath your most valuable investment. With the Australian climate presenting a unique set of challenges, from bushfires to flooding, ensuring you have comprehensive cover isn't just a luxury—it's a necessity. The right policy serves as an armor, protecting your sanctuary against the unexpected onslaughts of nature and misfortune. - read more
For many Australians, owning a home is a significant life achievement and a substantial financial investment. Protecting this asset is crucial, which is where home insurance becomes indispensable. As we navigate the complexities of life and confront the unpredictable forces of nature, the right home insurance acts as a financial shield against potential losses. Whether it's a natural disaster, accidental damage, or theft, having a robust insurance policy ensures that your home and peace of mind remain intact. - read more
Embarking on the journey of homeownership is a landmark event full of anticipation and dreams. As Australians, we cherish the sanctuary of our homes against the backdrop of our incredibly diverse and sometimes unpredictable climate. However, with this excitement comes a significant responsibility—protecting your investment with the right home insurance. - read more
Knowledgebase
Liability Insurance: A type of insurance that provides protection against claims resulting from injuries and damage to people and/or property.
No comments yet. Be the first to share your thoughts.