Patricia’s* small business was affected by Cyclone Gabrielle in February 2023. The premises flooded and the business was closed for several weeks. Patricia submitted a claim to her insurer to cover material damage and business interruption, and also made a claims preparation costs (CPC) claim. Approximately three months later, the insurer paid Patricia $58,000 for the material damage and business interruption claims.
However, Patricia was most unhappy with the way her insurer had communicated with her and dealt with her claims. She also considered the insurer’s offer for the CPC claim ($1,230), did not accurately reflect the amount of time she spent putting together her claim.
Patricia raised many different issues while the complaint was going through the insurer’s internal complaints process, and while the complaint was being investigated by FSCL. In summary, Patricia complained that: The insurer had not met their obligations under the Fair Insurance Code (the Code) to pay her claim within a reasonable time, to provide information about the claim process, and to provide regular updates; the insurer failed to provide her with information from her file, failed to answer specific questions she had for them in lengthy telephone calls, and that their special investigations team bullied her; the amount offered for the CPC claim was too low.
The insurer acknowledged there were some shortcomings in their process. They apologised and offered to pay Patricia $10,000 to resolve her complaint. Patricia did not accept that amount and unilaterally changed the insurer’s settlement agreement to state they would pay her $100,000 not $10,000. Patricia said she did this to ‘catch out’ the insurer to see whether they were paying attention to detail.
What was FSCL’s view?
In the round, we considered the insurer’s $10,000 offer, along with their apology, was a more than fair way to resolve the complaint. This was especially considering that Patricia had changed the amount in the settlement agreement, which could have been viewed as her acting in bad faith.
The reasons for our decision were that: Patricia’s claim was paid within three months. We said that timeframe was reasonable, particularly considering the high volume of claims insurers received following the 2023 weather events. There was one occasion where the insurer gave Patricia an update after 22 working days (instead of the 20 working days required by the Code), but we did not consider this was a significant breach of the Code; we saw that most of the communication between Patricia and the insurer was via the loss adjusters. Some of this communication did not clearly set out what was happening with the claim process, and we encouraged the insurer to ensure loss adjusters (their agents) communicate clearly with clients; we saw no evidence that the insurer’s special investigations team bullied Patricia; The insurer didn’t provide all telephone calls to FSCL. We asked the insurer to ensure they send through all information to FSCL following our request for a full claim file; we said that the $1,230 the insurer offered to pay Patricia for the CPC claim appeared to be reasonable and, in any event, the $10,000 offer would cover any shortfall.
What was the outcome of FSCL’s investigation?
We told Patricia we would not continue investigating her complaint because the insurer had made a reasonable offer to resolve the complaint, and it was more than we could award if we issued a decision on the complaint. We encouraged Patricia to accept the $10,000 offer. Patricia did not accept this and continued to drip-feed further claims to the insurer and raise further complaint issues.
We told Patricia it appeared she was not pursuing her complaint in a reasonable way, and did not want to resolve her complaint. Patricia did not accept this, and we closed our file.
* name changed
Insights for consumers
We expect a consumer to pursue their complaint in a reasonable manner and with the goal to resolve the complaint, not to punish the financial service provider. Where a provider has made a reasonable settlement offer, we’ll look at declining to further investigate the complaint.
