The insured in this case was Warren Thorley of Sydney, the insurer, GIO. Serious fire damage was sustained by the Thorley’s private house, their documented repair bill totalling $112,094. GIO would offer no more than $55,590. The matter was eventually taken to FOS under their previous name of Insurance Enquiries & Complaints (IE&C) who calculated that GIO should pay $102,726, which slightly lower amount the insured accepted. The IEC Determination No was 298.10.6708.
In view of the unnecessary delay in obtaining this final figure the insured was entitled to Interest for the period involved on the additional amount of $47,136 as laid down by the Insurance Contracts Act 1984, and Interest amounting to $6,706 had also been claimed in the submission to IE&C. The liability for Interest was quite clear.
IE&C wrote to GIO asking them the following:
“Mr & Mrs Thorley have also claimed interest on the total sum payable by your office to them. Is your company agreeable to paying any and what interest to the claimants?
In other words IE&C, who should have been directing and controlling GIO were actually asking them “would you like to pay interest?” It was as blatant as that. This was akin to a judge saying to a convicted accused “would you like to go to prison”.
Not surprisingly GIO replied to IE&C as follows:-
“The GIO have no desire to pay any interest on this claim”
When the final Determination was produced, it concluded by stating:
“The Panel does not propose to award interest on this sum”
The Panel Chairperson was Peter Hardham.
However the chickens finally came home to roost in this murky saga when the claim for Interest was taken to the NSW Fair Trading Tribunal, by which time the entitlement to Interest had risen to $7,782.70. Upon receipt of the insureds claim, but this time through the Fair Trading Tribunal, GIO agreed to settle the claimed amount immediately, writing to the insured and saying:
“GIO will meet payment of the amount of interest claimed by you in the sum of $7,782.70”
This about-turn by GIO was relayed to IE&C, requesting their comments but there was no response.
All of the above is documented. Was this impartial claims adjudication?
Does anyone involved in this case actually know the guidlines, policy t & c’s – apart from the client’s representatives?
It would appear not. What a waste of critical resources. The only question I have is this: has the lesson been learnt??
The main problem is that the “Service” seems to be in bed with the insurance industry. Instead of ‘directing’ the insurance companies they request their views.
When the Service should be making decisions, independently, they ask the insurance industry for their ‘agreement’.
An ‘Ombudsman’ service should be entirely consumer focussed. This one isn’t – it is a cosy relationship with the very industry on which it should be arbitrating.
thanks !! very helpful post!