A Hollard client whose fire damage claim was dismissed because his past criminal offenses were not disclosed when his brokers entered into the commercial insurance policy lost his dispute with the insurer.
The Australian Financial Complaints Authority (AFCA) said the client breached their duty to disclose as information available showed brokers were acting under their authority during the online police application process, which was launched in January 2019.
“This means that any breach on their behalf will effectively be passed on to the complainant,” AFCA said in its ruling on the dispute.
The complainant claims that he did not breach his duty to disclose since he had forwarded his criminal record to his main broker, who then contacted another broker, identified as DU in the AFCA decision, to organize the police with Hollard.
DU incorrectly answered “no” to a question during the application process that asked whether the insured or any person to be insured under the policy has been charged or convicted of a criminal offense within the past five years. .
The offenses committed by the complainant in the five years leading up to 2019 include two charges of common assault for an offense committed in the previous year, one charge of threats of injury, endangerment or prejudice for an offense in 2016 and a charge of endangering life, health or safety for an offense committed in 2018.
The client asserts that he should not be held responsible for the brokers’ transactions with the insurer, insisting that they are the ones who failed to provide the insurer with the correct information.
But the AFCA disagrees, ruling that Hollard would not have agreed to offer coverage had the client’s criminal background information been disclosed during the police application process.
“The panel notes the criminal history to be disclosed in the five years preceding the establishment of the violent crimes policy,” AFCA said.
“According to the underwriting guidelines of the insurer, any crime involving violence is an automatic decline. “
Hollard had dismissed the claim – which was made after a fire broke out at the insured premises in December 2019 – after his investigation revealed that the client’s criminal history had not been disclosed when concluding the claim. the police.
The insurer claims that he would never have insured the client if his criminal history had been disclosed and his “damage” represents the total amount of the claim, because he would not have been in danger at the time of the fire. .
To support its position, the insurer has provided an excerpt from its underwriting guidelines as well as a statement from its COO.
The AFCA also claims that Hollard is not responsible for the conduct of the client’s prime broker and DU, as they are not the authorized representatives of the insurer.
The client had argued that he had made a successful claim under another commercial insurance policy with another insurer that had been entered into by his prime broker, who had not passed on his criminal history.
The AFCA says that since the information available shows that the prime broker may have been an authorized representative of this insurer, then “no doubt [it] is responsible ”for the broker’s errors.
Click here to learn more about the decision.