Home insurers may be leaving Australians exposed to higher repair costs by using cash settlements in a significant percentage of claims, an ASIC review has found.
ASIC Commissioner Alan Kirkland said insurers who offer cash settlements need to be vigilant that their assessments reflect the true cost of repairs, and that consumers have enough information to make informed decisions.
‘For many homeowners, accepting a cash settlement, instead of the insurer managing repairs, can mean taking on the responsibility of finding tradespeople, overseeing repairs, dealing with unexpected costs and navigating issues that would otherwise be handled by the insurer,’ Mr Kirkland said.
Cash settlements play major role in home insurance claims - text version
What ASIC found in its home insurance cash settlements review
Across all ASIC-reviewed claims
63% of home insurance claims involved a full cash settlement or partial cash settlement, where insurers repair or rebuild some of the damage
Cyclone Jasper findings
- 2 of 5 insurers used full or partial cash settlements in more than 80% of claims
- 52% of cash settlement offers were based on just one quote
- 73% of one quote offers were from an insurer’s preferred supplier
- 1 in 4 claims were fully or partially cash settled due to pre-existing maintenance issues
- 4 of 5 insurers failed to adequately support vulnerable consumers in reviewed files
Consumers need clearer information, fairer payouts and better support.
Consumers may need to complain to get a fairer outcome.
This review covered around 65% of the home insurance market.
ASIC’s review of insurer practices revealed that full cash settlements or partial cash settlements, where insurers repair or rebuild some of the damage, were used in at least 63% of ASIC-reviewed claims. For Cyclone Jasper, two of five insurers used them in more than 80% of claims.
‘While cash settlements can offer flexibility and faster resolution, consumers must be given enough information to understand what the settlement will cover, so they can make an informed choice.’ Mr Kirkland said.
More than half (52%) of the cash settlement offers ASIC reviewed were based on a single quote, with insurers often relying on quotes from preferred suppliers that may not reflect the price consumers face when arranging repairs themselves.
‘The easy option for insurers can be the expensive one for homeowners. If the amount falls short, consumers can be left shouldering the cost of repairs and paying the difference out of their own pocket,’ Mr Kirkland said.
‘If homeowners are taking on more work, more risk and potentially more costs, home insurers need to take this into account when offering to settle with cash.’
ASIC also identified concerning gaps in how insurers supported vulnerable consumers during the claims process.
‘Four of five insurers we reviewed failed to consistently apply policies in place for dealing with vulnerable customers and even when these customers were identified, some insurers did not record information or share it with third parties involved in the claim process,’ Mr Kirkland said.
ASIC also found that a settlement amount can increase significantly after a consumer lodges a complaint, raising concerns about the fairness of some initial offers made by insurers.
Mr Kirkland said, ‘Consumers shouldn't have to fight for a fair settlement. Australians have a right to expect a fair offer from the start.
‘Insurers need to ensure cash settlement offers are realistic, transparent and properly explained, and consumers need enough information to know if a cash payout will genuinely cover the cost of repairs, and if it is the right outcome for them.’
ASIC is calling on insurers to improve how they communicate cash settlement offers, provide clearer information about consumer rights and options, and ensure settlement amounts reflect realistic repair costs.
ASIC has detailed its findings for industry today in its review: Beyond the payout: ASIC warns home insurers to reduce cash settlement risks, which details better and poorer practices.
Background
ASIC reviewed the use of cash settlements in home insurance claims, examining where there were risks of consumer harm.
The review examined claims arising from Cyclone Jasper in Far North Queensland in 2023, as well as insurers' broader cash settlement practices and any improvements made since.
This work mirrors findings from ASIC’s follow up work in June 2025, assessing how general insurers had addressed areas for improvement identified in Report 768 Navigating the storm: ASIC’s review of home insurance claims, released in August 2023.
Insurers involved in this latest review included:
- Insurance Australia Group (IAG), including Insurance Manufacturers of Australia Pty Ltd and Insurance Australia Limited
- AAI Limited
- QBE Insurance (Australia) Limited
- Allianz Australia Insurance Limited
- Sure Insurance Pty Ltd.
Related links
- Article: Beyond the payout: ASIC warns home insurers to reduce cash settlement risks (31 August 2026)
- Infographic: Cash settlements play major role in home insurance claims (31 August 2026)
- News: ASIC tells home insurers: Fix your oversight of independent experts and improve communication on cash settlements (5 June 2025)
- Report 768 Navigating the storm: ASIC’s review of home insurance claims (REP 768) (16 August 2023)
For consumers
Consumers considering a cash settlement should:
- carefully consider whether the amount offered will cover the full cost of repairs
- ask questions if they do not understand what is included in the settlement
- seek independent advice if they are unsure whether the offer is appropriate
- understand their review rights and options if they disagree with the amount offered.
You can find out more about how home insurance cash settlements work on ASIC’s free Moneysmart website for consumers.