Suncorp chief executive, insurance, Gary Dransfield has admitted to the Royal Commission into Misconduct in the Banking and Financial Services Industry that it could have “communicated better” after the Victorian bushfires of Christmas, 2015.
Senior Counsel Assisting the Commission, Rowena Orr QC, questioned Dransfield about Suncorp unit AAMI’s complete replacement cover (CRC) products, introduced by AAMI in 2006 in response to bushfires in the ACT in 2003 and which were aimed at helping to mitigate against customers’ underinsurance.
As a result of Victoria’s Wye River bushfires on Christmas Day, 2015, 334 properties had been affected, with 116 destroyed. Suncorp received 63 claims in relation to the fires, the majority of which were resolved wholly or partly by a cash settlement.
Local Federal MP, Sarah Henderson at the time criticised AAMI’s handling of claims after timelines were not met for the majority of the claims, the Commission was told.
Dransfield said there were factors outside AAMI’s control in the delays and accepted AAMI could have “communicated better,” but did not accept that the insurer’s actions were the sole source of the delay.
Orr asked: “Do you accept that AAI (Suncorp) contributed to the delay experienced by some policy holders who held the CRC option as you indicated in paragraph 89 of your statement?”
“Not separate from the communication, no,” Dransfield replied.
Orr continued: “So, your acceptance is confined, even if this might not be clear from your statement … to ‘you could have done more to keep customers informed as to the progress of their claims?’”
“Yes,” Dransfield replied.
Orr mentioned a second criticism raised by Henderson, which was that AAI was underquoting the cost of rebuilding. However, Dransfield did not believe these criticisms to be justified.
Orr examined how the quoting practices played out in three Wye River claims, where there were significant differences in quotes from builders obtained by the insured and the cash settlement amounts offered by the insurer.
She asked: “Does this concern you, Mr Dransfield … In each of these cases you offered a cash settlement to the customers based on an agreed scope of works and the customers got their own quotes about what it would cost them to get that scope of works done, and in each of these instances it was going to cost them significantly more than the amount that was offered as a cash settlement?”
While Dransfield said one of the discrepancies could be explained by “provisional sums” relating to stormwater and wastewater systems in remote areas, he did not accept that this was the sole explanation for differential in amounts offered in cash settlement and the amounts quoted by those builders sourced by the policy holders.