ASIC Review Finds Australian Insurers Settled 63% of Cyclone Jasper Claims With Cash, Often Based on a Single Discounted Quote

The Australian Securities and Investments Commission says home insurers are settling most disaster claims with cash instead of fixing the damage themselves, and the payouts often don't cover what repairs actually cost.

ASIC reviewed home building insurance claims tied to Cyclone Jasper, which hit Far North Queensland in December 2023. It examined five insurers covering most of the market: Insurance Australia Group (which owns NRMA and CGU), AAI (Suncorp, AAMI, Apia), QBE, Allianz, and Sure Insurance.

The findings: cash settlements were used in more than 63% of final claims reviewed. IAG and Allianz each used full or partial cash settlements in more than 80% of their cases, according to the Sydney Morning Herald.

One Quote, Often Discounted

More than half of cash settlement offers, 52%, were based on a single quote, the Sydney Morning Herald reported. Nearly three-quarters of those single-quote offers came from an insurer's preferred supplier, a builder who does repeat work for the insurance company and prices jobs accordingly.

ASIC Commissioner Alan Kirkland said that's the core problem. "The easy option for insurers can be the expensive one for home owners," Kirkland said. "If the amount falls short, consumers can be left shouldering the cost of repairs and paying the difference out of their own pocket."

In one case cited in the review, a preferred builder quoted an insurer 40% less than it would charge an individual homeowner for the same job. The insurer paid the cash settlement based on that discounted number. When the customer tried to hire the same builder to actually do the work for that price, the builder refused.

None of the five insurers had systems in place to consistently record why a claim was settled with cash rather than managed repairs, ASIC found. Three insurers also failed to tell customers they had the right to change their mind after accepting a cash settlement, though two told ASIC they've since started disclosing that clearly.

Vulnerable Customers Left Exposed

Four of the five insurers reviewed had inconsistent or flawed processes for identifying and helping vulnerable customers, according to ASIC.

The stakes are real. Julia Hirning, a pensioner in Far North Queensland, was forced to sell her home after her insurer's cash settlement wasn't enough to fix mold damage from flooding in January 2025, according to the ABC.

Leon Wuttrich, a 72-year-old pensioner and former builder in Cardwell, faced a similar fight after February 2025 flooding. His insurer's preferred builder quoted $127,000 to fix his home. Skeptical, Wuttrich got two independent quotes: $305,000 and $327,000. The insurer initially refused to budge, telling him it didn't believe the higher figures were accurate, Wuttrich told AAP. He eventually received a $318,000 settlement, but only after ASIC intervened.

ASIC also found that settlement amounts sometimes rose significantly once a customer filed a complaint, which raises a fair question about how solid the original offers actually were.

The Insurers' Side

An Insurance Council of Australia spokesperson pushed back on the framing that cash settlements are inherently a bad deal, telling AAP they can offer customers greater flexibility and speed, letting people prioritize urgent fixes and decide for themselves how to spend the money rather than waiting on an insurer-managed rebuild timeline.

But ASIC's review found most customers weren't given enough information to actually weigh that tradeoff, meaning the choice to take cash often wasn't an informed one in the first place.

What Happens Next

ASIC did not announce fines, charges, or any enforcement action against IAG, AAI, QBE, Allianz, or Sure. This was a review, not a prosecution, and the regulator stopped short of alleging specific legal breaches.

What ASIC did do is call on insurers to improve communication, stop leaning on single discounted quotes, and make sure settlement offers reflect real repair costs. A new draft of the General Insurance Code of Practice is due to be handed to ASIC later this year, and the regulator says it will keep monitoring the issue.

The report lands as home insurance premiums have climbed 51% over the past five years, according to the ABC. Whether the industry actually changes its cash-settlement practices before the next cyclone season, or whether ASIC has to escalate beyond a report and a warning, remains an open question.