Need to know
- A QBE whistleblower has told CHOICE of concerns about the practices and culture at CHU insurance
- CHU has breached their licence which has been reported to ASIC
- CHOICE advocates says action needs to be taken against landlord insurance providers who pursue renters
A whistleblower within insurance giant QBE has spoken out about the unethical culture and practices of a brand it underwrites, CHU insurance.
CHU sells landlord and strata insurance, among other products, and CHOICE has documented multiple examples of the company pursuing renters over accidental property damage without any proof of liability or negligence.
CHOICE has also confirmed that CHU has been reported to ASIC over a breach of its licence obligations.
Landlord insurers pursuing renters
The practice of going after renters to claw back payouts on landlord claims has been highlighted by CHOICE in multiple previous investigations.
We found an example of CHU trying to bill a renter for more than $180,000 over an accidental fire at their property involving a faulty barbecue.
A QBE employee says CHU has 'gone rogue' when it comes to recovering benefit payouts
QBE employee James* says CHU has "gone rogue" and is "bloody minded" when it comes to recovering benefit payouts. (*Not their real name.)
"The CHU claims come to light and the complaints come to light and you think 'What the hell is going on? Show us your complaints processes'. And then you realise their complaints processes don't even comply with their own licence obligations, and they are doing it on [QBE's] behalf and you're the one that's going to have to fix it," he says.
Where was QBE's oversight?
QBE is meant to oversee the claims, recoveries and complaints procedures at CHU Insurance. When QBE recently became aware of CHU's breach of their licence obligations, they self-reported the breach to ASIC.
CHOICE has confirmed the breach report to ASIC with multiple well-placed sources.
James described the breach at CHU as "embarrassing" for QBE Insurance.
"When you have an insurance company like QBE, a lot of the business is being done in your name, you really want to strangle them when you find out what they have done. But it just means there is room for tighter controls on these things," he says.
"When CHU assures us that they know what they are doing, we unfortunately have a tendency to believe them."
Big impact on customers
CHU was an independent insurance agency before they were bought by QBE Insurance in 2005. They were owned by QBE for a decade before being sold to the Steadfast Group, but QBE remains CHU's underwriter.
The breach at CHU is 'embarrassing' for QBE Insurance
James believes the problems began after CHU was sold to Steadfast, but admits that QBE's systems to detect the breach were lacking, and that's when things "got out of hand".
"It may be three or five people affected and only a minor blip on your financial screens, but it still has a big impact," he says.
No response from insurers
QBE did not respond to questions from CHOICE about the tightness of their regulatory oversight of CHU Insurance, or what actions would be taken to avoid further breaches at the insurer, instead referring questions to CHU.
CHOICE sent a list of detailed questions to CHU's CEO Kimberley Jonsson, a long-time employee who took over running the insurer after an internal promotion in March this year.
We asked when she personally became aware of the breach and if it was reported to ASIC within 10 days of her becoming aware of it, as is legally mandated by ASIC. We also asked about the culture of the organisation and whether any steps were being taken to ensure the breach did not occur again.
It's shameful conduct that reveals a toxic culture of profit at all costs
CHOICE senior policy and campaigns adviser Patrick Veyret
Jonsson did not respond to the detailed written questions, declined a request to be interviewed, and says she is not aware of any breach having occurred.
"CHU has not lodged a breach report with ASIC under its AFSL (Australian Financial Services Licence) in relation to its complaints handling processes. In addition, ASIC has not informed CHU that it is under investigation," she says.
The breach was not reported by CHU but by QBE, and not all breaches reported to ASIC lead to an investigation.
CHOICE is not suggesting that there is an ASIC investigation.
The former CEO Bobby Lehane, who ran CHU for nearly six years ending in March, also didn't respond to requests for a comment.
'Gung ho' landlord insurers
When it comes to landlord insurance providers pursuing renters over accidental and unintentional property damage, CHOICE has found examples from three insurance companies in the industry.
The examples found relate to QBE Insurance (through CHU), Suncorp (through subsidiaries GIO and AAMI) and Chubb insurance.
James says the issue of landlord insurance recoveries is one where CHU has been too "gung ho", while acknowledging it was also an industry-wide issue.
"It's a cultural thing: people move between the insurers, and insurers know what the others are doing. Sometimes it means you fix problems, because somebody says, 'Hey we don't do it this way where I came from', and sometimes you entrench problems because somebody says 'I know a better way', and suddenly you've fallen foul of your principles," he says.
ASIC must take action and prosecute insurers who engage in pursuing people who rent for accidental or unintentional damage
CHOICE senior policy and campaigns adviser Patrick Veyret
Patrick Veyret, senior policy and campaigns adviser for CHOICE, says the practice of landlord insurance providers pursuing renters over accidental damage is "predatory".
"It's shameful conduct that reveals a toxic culture of profit at all costs."
He also called on ASIC to act against insurance companies like CHU who are going after renters.
"Insurers have a legal obligation as a condition of their licence to act honestly and fairly. ASIC must take action and prosecute insurers who engage in pursuing people who rent for accidental or unintentional damage. Inaction or delay from ASIC will only see more vulnerable people targeted by predatory insurers or debt collectors," he says.
If you know more about this issue contact CHOICE investigative journalist Jarni Blakkarly at jblakkarly@choice.com.au.
Stock images: Getty, unless otherwise stated.
