ASIC says most reviewed home insurance claims were settled with cash, not insurer-managed repairs.
Why it matters: The regulator's warning could pressure insurers to tighten claims handling and disclosures. It also matters for homeowners hit by floods, fires or storms who may be left to manage repairs and cost overruns themselves.
- ASIC said at least 63% of final home insurance claims in its review involved a cash settlement.
- The review covered policies, procedures, training materials and claim files from five major insurers: IAG, AAI/Suncorp, QBE, Allianz and Sure Insurance.
- ASIC warned some cash offers were based on discounted supplier quotes rather than market prices.
- The regulator said cash settlement fact sheets often gave consumers only minimal information about review rights and deadlines.
Australia's corporate regulator says its latest review found home insurers are leaning heavily on cash settlements, a practice that can leave some policyholders worse off after disaster damage.
ASIC said most final claims it reviewed were resolved with full or partial cash payments rather than insurer-managed repairs or rebuilds. The regulator warned that some offers may not reflect the true cost of restoration, especially when insurers rely on discounted quotes from preferred suppliers instead of market prices. ABC News
Commissioner Alan Kirkland said there are "real questions around the fairness of the offers that are being made to consumers." He also said insurers must provide a cash settlement fact sheet, but those documents should explain options in plain language rather than sending customers to complex product disclosure statements. ASIC
ASIC's follow-up review examined policies, procedures, training materials and claim files from Insurance Australia Group, AAI/Suncorp, QBE, Allianz and Sure Insurance. The regulator said vulnerable customers were not consistently identified or protected through the claim lifecycle in earlier work, and cash settlement processes did not always account for vulnerability. ASIC report
The issue lands in a regulated claims-handling regime. Claims handling and settling became a regulated financial service on 1 January 2022, giving ASIC a clearer line of sight over how insurers manage major home-damage claims.
By the numbers
- 63% - share of final home insurance claims in ASIC's review that involved a cash settlement
- 5 - major insurers named in the ABC report that ASIC examined
- 1 January 2022 - date claims handling and settling became a regulated financial service in Australia
Yes, but: Cash settlements are not automatically improper. ASIC's concern is that some customers may not be getting enough information, or enough money, to restore their homes if they have to manage repairs themselves.
What's next: ASIC expects insurers to improve oversight of independent experts and communication on cash settlements. The regulator has previously flagged home insurance claims handling as an area needing improvement since its 2023 severe-weather review.