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ARTICLE · 27 OCTOBER 2026

One Claim. $2 Million Penalty. A Warning To Every Insurer.

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Australia's securities regulator has secured a landmark $2 million civil penalty against Hollard Insurance for breaching its duty of utmost good faith during a 17-month storm damage claim. The Federal Court found that repeated delays, inadequate expert assessment, and poor communication constituted a single contravention—even without deliberate misconduct. This precedent-setting decision signals that claims-handling failures on individual policies can now trigger seven-figure penalties, fundamentally

AustraliaInsurance
Nicole Wearne
Nicole Wearne
Ailbhe Kirrane
Ailbhe Kirrane
Gus Dowdle
Gus Dowdle
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ASIC secures the first civil penalty against an insurer for breach of utmost good faith in claims handling

Claims-handling failures can expose an insurer to a seven-figure penalty on a single claim, even without deliberate or dishonest conduct. On 9 October 2026, the Federal Court ordered Hollard Insurance Partners Limited (“Hollard”) to pay $2 million for breaching its duty of utmost good faith in handling a storm damage claim. ASIC described the outcome as the first civil penalty imposed on an insurer for breach of that duty.

The warning is not confined to coverage decisions. Repeated delays, inadequate attention to expert evidence and unclear settlement communications combined to constitute one admitted contravention over approximately 17 months. Hollard’s extensive remediation reduced the need for specific deterrence; it did not prevent a substantial penalty. Insurers should examine how claims actually progress, not simply whether their procedures look adequate on paper.

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