9.2.1Sacha Murphy
Ms Murphy took out a home and contents insurance policy with Youi in 2012.[1]
In November 2016, there was a severe hail storm in Broken Hill that caused damage to Ms Murphy’s roof.[2] In January 2017, Ms Murphy made a claim under her policy for damage to the roof.[3] Ms Murphy’s claim was accepted on 15 February 2017.[4] It took Ms Murphy and her partner several months to save up to pay the excess,[5] which they paid in May 2017. In late May, Ms Murphy and her partner signed a scope of works and agreed for a building company chosen by Youi (Builder A) to complete the repairs.[6]
By that time, Youi was aware of a number of issues in relation to Builder A’s performance, specifically in relation to claims in Broken Hill.[7] Youi had formed the view that Builder A had breached the law by not taking out statutory insurance before commencing building jobs, and had suspended new jobs being allocated to Builder A.[8] Despite this, Youi did not reallocate Ms Murphy’s claim to another builder, even though work had not yet commenced on her property.[9] Mr Storey acknowledged that, by not informing Ms Murphy about the issues it had identified with Builder A, or reallocating her claim to another builder, Youi failed to handle her claim in a fair and transparent manner, failed to act in an efficient, professional and practical manner, and breached Youi’s duty of utmost good faith.[10]
In around May 2017, Ms Murphy’s daughter’s lead levels were tested.[11] Lead contamination is a particular issue in the Broken Hill community, and the lead levels of children under five are monitored regularly.[12] Ms Murphy’s daughter’s lead levels were above the prescribed level, and, as a result of this, the lead levels in Ms Murphy’s backyard were tested. The lead level was found to be very high, and Ms Murphy was told that the soil in the backyard would need to be dug up and replaced with loam. However, this remediation work could not take place until her roof was repaired, because otherwise the lead dust in the roof cavity would re-contaminate the backyard.[13] Ms Murphy told the builder that, because of this, she wanted the repairs to the roof to be done quickly.[14]
Despite this, Builder A did not commence repairs until October 2017.[15] Mr Storey acknowledged that Youi did not do enough to address this delay,[16] and that, by not taking steps to ensure that Builder A complied with its obligations to commence repairs in the timeframe set by Youi’s contractual agreements, Youi failed to handle Ms Murphy’s claim in a timely manner.[17]
On 4 October 2017, Builder A commenced the repairs, and removed most of the roof of Ms Murphy’s property, as well as the air-conditioner and solar panels. At the end of that day, however, the builders told Ms Murphy and her partner that they would not do any more work because there were structural issues with the roof that were too much for them, and they needed more money to deal with those issues. The builders left without covering the roof, and asked Ms Murphy and her partner to pay around $1,800 before they would return.[18] Mr Storey acknowledged that it was not acceptable that Ms Murphy and her partner were left in this position.[19]
At this time, Ms Murphy was pregnant. Because the air-conditioner had been removed, it was hot inside the house, and lead dust was able to enter through the open air-conditioning vent. Ms Murphy was concerned about the impact of this on her family and unborn child.[20]
On 6 October 2017, Ms Murphy called Youi and told the representative that she was unhappy with how long it was taking for the roof to be repaired, and that she was pregnant and being exposed to high levels of lead.[21] Youi didn’t take any further action to cover the roof until 9 October 2017.[22] On that day, it instructed Builder A to cover the roof, but did not check whether Builder A had done so.[23] Builder A did not cover the roof. Mr Storey accepted that Youi did not do enough when it learned that Builder A had left the roof uncovered,[24] and that Youi’s response to the situation of Ms Murphy and her family was inadequate.[25]
On 19 October 2017, just over two weeks after Builder A opened up the roof of Ms Murphy’s home, Youi authorised Builder A’s variation for the extra work to ensure that the roof complied with the building code.[26] On 20 October 2017, Builder A returned to commence the repair work but then told Youi that it had identified further difficulties with the roof, and that the repair cost would be significant.[27] Ms Murphy called Youi later that day and told the Youi representative, among other things, that she was very upset about her family being exposed to lead dust.[28]
After this call, Youi agreed to arrange temporary accommodation for Ms Murphy and her family.[29] Youi again requested that Builder A make the property safe for Ms Murphy and her family to live in, by closing the roof.[30] After spending four nights in a caravan park, the family returned to the property.[31]
Ms Murphy told the Commission that it was clear on their first night back in the house that the roof had not been replaced properly as they could hear the noise of the loose metal roofing in the wind.[32] Youi did not take any steps to check that the lead dust could no longer enter the property before the family went home.[33]
Ms Murphy made a formal complaint to Youi on 2 November 2017. Her letter was six pages long and raised a lengthy list of concerns.[34] In response, a representative of Youi spoke to Ms Murphy’s partner on the phone, and sent Ms Murphy a system-generated letter.[35] Mr Storey agreed that the letter was not an adequate response to the complaint made by Ms Murphy, and was not an appropriate way to deal with a customer who was clearly distressed by her experience with Youi.[36] He also agreed that the response did not comply with the requirements of the General Insurance Code of Practice.[37]
The Commission heard that Youi’s complaints and IDR process more generally is considered by its compliance area to be non-compliant with legal requirements.[38]
On 15 November 2017, it rained in Broken Hill.[39] Ms Murphy told the Commission that water poured into the house through the lounge, kitchen, bathroom and hallway, because the roof had not been replaced properly.[40] The water that got into the house caused internal damage, including cracks in the ceiling and mould.[41] Mr Storey acknowledged that Youi had not checked that Builder A had put the roof on correctly before Ms Murphy and her family returned to the home, despite being responsible for the workmanship of the builder.[42]
The roof was ultimately repaired by a different company in May 2018, 18 months after the hail damage.[43] Mr Storey acknowledged that the delays in dealing with Ms Murphy’s claim have prevented the lead remediation works in Ms Murphy’s backyard from proceeding.[44]
Mr Storey acknowledged that, in relation to Ms Murphy’s claim, Youi failed to conduct its claims in an honest, fair, transparent and timely manner,[45] failed to respond to the catastrophe that was the Broken Hill storm in a way that was efficient, professional, practical and compassionate towards Ms Murphy,[46] and breached its duty of utmost good faith.[47]
9.2.2Glenn Sutton
Like Ms Murphy, Mr Sutton had a home insurance policy with Youi.[48]
In late March 2017, Tropical Cyclone Debbie hit Queensland and caused damage to Mr and Mrs Sutton’s home – including causing some of the roof sheeting to come off, leaving a hole in the roof.[49] The damage caused by the storm meant that Mr and Mrs Sutton could not live in the home until it had been repaired.[50]
Mr and Mrs Sutton made a claim under their home insurance policy in March 2017.[51] Mr Sutton told the Commission about three issues in connection with his claim with Youi: inadequate make safe works; delays in repairs; and delays in reimbursement for temporary accommodation.
Inadequate make safe works
In relation to the first of those issues, Mr Sutton said that, a few days after the cyclone, a building company attended his house to perform make safe works.[52] The builder told Mr Sutton that they had only been allocated eight hours to do the job.[53] The builders did not install a tarpaulin to cover the hole in the roof, or conduct any drying work, despite mould being a significant problem when houses in tropical areas like Airlie Beach have been inundated with water.[54] Mr Storey said that Youi does not have any particular procedures for houses at risk of mould, but that this was something Youi was considering introducing.[55] He also said that Youi does not check, as part of its standard claims process, whether make safe work has happened.[56]
Mr Sutton told the Commission that, around a month after the cyclone, a tarpaulin was fitted over the hole in the roof.[57] However, within weeks, the tarpaulin was torn by the wind, and water was able to enter the house when it rained.[58] Mr Sutton told Youi several times that the tarpaulin was not sufficient.[59] Despite this, no–one replaced the tarpaulin in the second half of 2017.[60] Over that time, mould continued to grow in the property.[61] Mr Storey agreed that, by May 2017, Youi was on notice that the tarpaulin that had been fitted had become loose and that water would be able to enter the property.[62] Mr Storey agreed that, despite being aware since May 2017 that the tarpaulin on the roof was only a temporary solution, Youi had not taken steps to check the tarpaulin or find a more permanent solution until January 2018.[63]
Mr Storey said that Youi accepted responsibility for failing to ensure that the property was covered and protected from the elements while the claim was being resolved.[64]
Delays in repairs
In relation to the second issue, Mr Sutton told the Commission that, in the weeks following the cyclone, several builders inspected his property to prepare reports.[65] In May 2017, Mr Sutton was sent a scope of works for the repairs. Mr Sutton was concerned that no–one had properly inspected the roof for structural damage.[66] He asked Youi to arrange for someone to inspect the roof.[67] Youi arranged for a builder to inspect the roof, and this builder prepared a report. The builder told Mr Sutton that he had not inspected the roof cavity.[68] Mr Sutton raised this with Youi and asked for an engineer to inspect the roof.[69] Youi arranged for this to happen, and the engineer concluded that the roof needed to be replaced.[70]
In August 2017, Mr Sutton signed a building contract with the builder on the basis of an updated scope of works that included the replacement of the roof.[71] Neither Youi nor the builder gave Mr Sutton a start date for the repairs.[72]
By October 2017, repair work still had not started.[73] On 9 October, Mr Sutton sent a complaint to Youi about a number of matters, including the continuing delays.[74] Youi did not provide a written response to that complaint.[75] Mr Storey accepted that Youi did not comply with the General Insurance Code of Practice in responding to this complaint.[76]
By November 2017, repair work still had not started. On 17 November 2017, Youi sent an email to Mr Sutton raising the possibility of cash settling the claim and advising that Mr Sutton would need to organise for an area of the house affected by termites to be repaired before any other repairs could proceed.[77] Mr Sutton told the Commission that this was ‘out of the blue’ and that Youi had not previously discussed a cash settlement with him.[78]
When Mr Sutton gave evidence to the Commission, the house had still not been repaired. Mr Storey acknowledged that it is unacceptable that the Suttons were not yet back in their home, and said that Youi accepted responsibility for the extended delays in dealing with Mr and Mrs Sutton’s claim.[79]
Temporary accommodation
In relation to the third issue, Mr Sutton told the Commission that he and his wife have been living in temporary accommodation since the cyclone in March 2017.[80] They have had to move four times,[81] and each time have had to find the accommodation themselves, which has been difficult due to the limited availability of suitable accommodation in the Airlie Beach area since the cyclone.[82]
Mr Sutton told the Commission about his difficulties in getting reimbursement from Youi for temporary accommodation. Youi would regularly take weeks to reimburse costs and Mr Sutton had to follow up Youi when they failed to pay.[83] Mr Storey agreed that Mr and Mrs Sutton were put under financial pressure because Youi delayed in reimbursing them for their temporary accommodation.[84] At various times, Mr and Mrs Sutton were left thousands of dollars out of pocket. Mr Storey agreed that it was not acceptable that Youi repeatedly delayed in reimbursing Mr and Mrs Sutton for the temporary accommodation cost.[85]
Mr Sutton’s ‘claims adviser’ at Youi, who had primary responsibility for organising the reimbursement of temporary accommodation expenses, was located in South Africa.[86] Mr Storey accepted that this resulted in delays in the handling of Mr Sutton’s claim.[87] Mr Storey told the Commission that it had been recognised within Youi in August 2017 that it was not ideal for claims advisers based in South Africa to be trying to manage claims outside of Australian business hours.[88] Despite this, Youi did not transfer Mr Sutton’s claim to a claims adviser based in Australia until January 2018.[89]
Mr Storey accepted that, in relation to Mr Sutton’s claim, Youi failed to conduct its claims handling process in an honest, fair, transparent and timely manner, failed to respond to Tropical Cyclone Debbie in an efficient, professional and practical way and in a compassionate manner, and failed to comply with its duty of utmost good faith.[90]
[1] Exhibit 6.330, Witness statement of Sacha Murphy, 20 June 2018, 1 [4].
[2] Exhibit 6.330, Witness statement of Sacha Murphy, 20 June 2018, 1 [5], [7].
[3] Transcript, Sacha Murphy, 19 September 2018, 6157.
[4] Exhibit 6.334, Witness statement of Jason Storey, 17 September 2018, 32 [70(c)(ii)].
[5] Transcript, Sacha Murphy, 19 September 2018, 6159.
[6] Exhibit 6.330, Witness statement of Sacha Murphy, 20 June 2018, 2 [10]; Transcript, Sacha Murphy, 19 September 2018, 6158.
[7] Transcript, Jason Storey, 19 September 2018, 6205.
[8] Transcript, Jason Storey, 19 September 2018, 6210.
[9] Transcript, Jason Storey, 19 September 2018, 6209–10.
[10] Transcript, Jason Storey, 19 September 2018, 6210–11.
[11] Transcript, Sacha Murphy, 19 September 2018, 6159.
[12] Transcript, Sacha Murphy, 19 September 2018, 6156.
[13] Transcript, Sacha Murphy, 19 September 2018, 6160.
[14] Transcript, Sacha Murphy, 19 September 2018, 6160.
[15] Transcript, Jason Storey, 19 September 2018, 6216.
[16] Transcript, Jason Storey, 19 September 2018, 6216.
[17] Transcript, Jason Storey, 19 September 2018, 6216.
[18] Transcript, Sacha Murphy, 19 September 2018, 6161, 6163.
[19] Transcript, Jason Storey, 19 September 2018, 6217.
[20] Transcript, Sacha Murphy, 19 September 2018, 6163–4.
[21] Exhibit 6.330, Witness statement of Sacha Murphy, 20 June 2018, 4 [23]; Transcript, Jason Storey, 19 September 2018, 6219.
[22] Transcript, Jason Storey, 19 September 2018, 6219.
[23] Transcript, Jason Storey, 19 September 2018, 6220.
[24] Transcript, Jason Storey, 19 September 2018, 6220.
[25] Transcript, Jason Storey, 19 September 2018, 6220.
[26] Transcript, Jason Storey, 19 September 2018, 6220.
[27] Transcript, Jason Storey, 19 September 2018, 6221.
[28] Exhibit 6.330, Witness statement of Sacha Murphy, 20 June 2018, 4 [28].
[29] Transcript, Sacha Murphy, 19 September 2018, 6166.
[30] Transcript, Jason Storey, 19 September 2018, 6221–2.
[31] Transcript, Sacha Murphy, 19 September 2018, 6166.
[32] Exhibit 6.330, Witness statement of Sacha Murphy, 20 June 2018, 5 [31].
[33] Transcript, Jason Storey, 19 September 2018, 6222.
[34] Exhibit 6.330, Witness statement of Sacha Murphy, 20 June 2018, 5 [34]; Transcript, Jason Storey, 19 September 2018, 6222.
[35] Transcript, Jason Storey, 19 September 2018, 6224.
[36] Transcript, Jason Storey, 19 September 2018, 6227.
[37] Transcript, Jason Storey, 19 September 2018, 6228.
[38] Transcript, Jason Storey, 19 September 2018, 6230.
[39] Transcript, Sacha Murphy, 19 September 2018, 6168.
[40] Exhibit 6.330, Witness statement of Sacha Murphy, 20 June 2018, 6 [39].
[41] Exhibit 6.330, Witness statement of Sacha Murphy, 20 June 2018, 6 [43].
[42] Transcript, Jason Storey, 19 September 2018, 6232.
[43] Transcript, Jason Storey, 19 September 2018, 6234.
[44] Transcript, Jason Storey, 19 September 2018, 6234.
[45] Transcript, Jason Storey, 19 September 2018, 6234.
[46] Transcript, Jason Storey, 19 September 2018, 6234.
[47] Transcript, Jason Storey, 19 September 2018, 6191.
[48] Transcript, Jason Storey, 19 September 2018, 6234.
[49] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 1–2 [5]–[7].
[50] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 2 [7].
[51] Transcript, Jason Storey, 19 September 2018, 6235.
[52] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 2 [12].
[53] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 2 [13].
[54] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 2 [13]; Transcript, Jason Storey, 19 September 2018, 6238.
[55] Transcript, Jason Storey, 19 September 2018, 6238–9.
[56] Transcript, Jason Storey, 19 September 2018, 6204.
[57] Transcript, Glenn Sutton, 19 September 2018, 6174.
[58] Transcript, Glenn Sutton, 19 September 2018, 6174.
[59] Transcript, Glenn Sutton, 19 September 2018, 6174–5.
[60] Transcript, Glenn Sutton, 19 September 2018, 6175–6.
[61] Transcript, Glenn Sutton, 19 September 2018, 6176.
[62] Transcript, Jason Storey, 19 September 2018, 6240.
[63] Transcript, Jason Storey, 19 September 2018, 6242, 6243.
[64] Transcript, Jason Storey, 19 September 2018, 6236.
[65] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 3 [20].
[66] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 3–4 [21]–[22].
[67] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 4 [22].
[68] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 4 [23].
[69] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 4 [24].
[70] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 4 [25]. In its submissions, Youi emphasised that the engineer’s conclusion that the roof needed to be replaced was based on the use of inadequate fixings in the original roof construction: see Youi, Module 6 Case Study Submission, 12 [43].
[71] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 4 [27].
[72] Transcript, Glenn Sutton, 19 September 2018, 6179.
[73] Transcript, Glenn Sutton, 19 September 2018, 6179.
[74] Transcript, Glenn Sutton, 19 September 2018, 6179–80.
[75] Transcript, Jason Storey, 19 September 2018, 6245.
[76] Transcript, Jason Storey, 19 September 2018, 6245.
[77] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 5 [31].
[78] Transcript, Glenn Sutton, 19 September 2018, 6181.
[79] Transcript, Jason Storey, 19 September 2018, 6235.
[80] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 5 [35].
[81] Transcript, Glenn Sutton, 19 September 2018, 6182.
[82] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 5 [35].
[83] Exhibit 6.332, Witness statement of Glenn Sutton, 20 June 2018, 6 [36].
[84] Transcript, Jason Storey, 19 September 2018, 6235.
[85] Transcript, Jason Storey, 19 September 2018, 6235.
[86] Transcript, Jason Storey, 20 September 2018, 6257.
[87] Transcript, Jason Storey, 20 September 2018, 6262.
[88] Transcript, Jason Storey, 20 September 2018, 6261.
[89] Transcript, Jason Storey, 20 September 2018, 6262.
[90] Transcript, Jason Storey, 19 September 2018, 6236.