The Australian financial services regulator Australian Securities & Investments Commission (ASIC) has said that home insurers may be leaving Australians exposed to higher repair costs by using cash settlements in a significant percentage of claims.
A new review “Beyond the payout: ASIC warns home insurers to reduce cash settlement risks” published on 31 August 2026 by the ASIC has revealed that 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.
According to a media release by ASIC, Commissioner Alan Kirkland has said that the 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.
ASIC’s review of insurers’ practices has 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.