Suncorp settled insurance claims from people who lost homes in Victoria's Christmas Day 2015 bushfires for cash amounts based on the lowest quote, banking royal commission lawyers say.
The cash settlement sums offered by its AAMI business may not have been sufficient for people to repair or rebuild their own homes on a new for old basis, counsel assisting the commission said.
The inquiry heard that in some cases the cash settlements were hundreds of thousands of dollars less than the home owner's own rebuilding quotes.
Counsel assisting said Suncorp cash settled sums based on the lowest quote it obtained, raising serious concerns about whether the cash settlement amounts were sufficient.
The barristers have recommended a misconduct finding against Suncorp over misleading ads that promised AAMI would repair or rebuild damaged homes "no matter the cost".
AAMI copped a $43,200 penalty over the misleading statements about complete replacement cover, when it could have faced criminal charges and up to $7.2 million in fines.
That was despite the regulator having reasonable grounds to believe AAMI had broken financial services laws by making false or misleading representations.
While the Australian Securities and Investments Commission closed the advertising matter without taking criminal or civil action, the royal commission could still make findings against Suncorp.
Counsel assisting said the insurer may have engaged in misleading or deceptive conduct by advertising that AAMI would repair or rebuild an insured's house no matter the cost.
That is not a criminal offence provision, but the alternative suggested breach of the law by making false or misleading representations can attract civil or criminal penalties.
The lawyers also recommended a number of findings of conduct falling below community standards and expectations, including by cash settling claims based on the lowest quote the insurer obtained.
AAMI also sent policy renewal letters to customers whose properties were destroyed in the fires and charged them premiums for home and contents insurance.
The Christmas Day bushfires destroyed 116 properties, many of them holiday homes, in Wye River and Separation Creek.
Suncorp received 63 claims, half under its AAMI brand.
Counsel assisting also recommended misconduct findings against insurer Youi over the cases of a Queensland couple whose home was badly damaged by Cyclone Debbie in March 2017 and a Broken Hill family after their house was left "broken" in a freak hail storm in November 2016.
Both families are still waiting for their homes to be fixed so they can move back in.
The suggested findings involved misconduct by failing to handle the two claims as required under the general insurance code of practice and conduct falling below community expectations related to Youi's home policies excluding additional costs from properties not being up to code.
