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General insurance complaints soar 25%

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The number of general insurance disputes received by the Financial Ombudsman Service (FOS) soared 25% last financial year to a new high.

FOS received 13,200 general insurance disputes in the year to June 30, after numbers increased 19% the previous year to 10,588. Total disputes received from all sectors grew 16% to 39,479.

The figures surpass 2011/12, when dispute numbers were elevated by several major disasters.

“The general insurance industry is largely responsible for the significant level of increase in complaints received at FOS,” Lead Ombudsman, General Insurance, John Price told insuranceNEWS.com.au.

He says the rise appears to coincide with increased outsourcing of claims handling, either externally or overseas, and organisational changes that affect internal dispute resolution resourcing.

“People are disappointed with the delays in claims handling that have occurred, and that means more people come through to the Financial Ombudsman Service.”

Higher claims numbers and increased consumer empowerment through social media are also likely contributors, Mr Price says.

FOS accepted 8756 general insurance disputes into case management last financial year, up 28% and representing more than one-third of overall disputes accepted.

He says FOS has appointed three extra insurance ombudsmen, taking the total to eight, including both full and part-time positions, to handle the increasing workload.

Insurance Council of Australia CEO Rob Whelan says weather catastrophes, a rise in the number of claims lodged, increased public awareness of the ombudsman and growth in international travel and lodgement of travel claims contributed to the rise.

FOS is still receiving and reviewing disputes from Cyclone Debbie, including almost 90 claims from the NSW Small Business Commissioner related to flooding in the state’s north.

“We are in the process now of finalising our response to those claims,” Mr Price says.

The number of disputes involving homeowners and flooding after Debbie was “nowhere near the level” seen after other events, suggesting increased flood cover awareness, he says.

FOS will be rolled into the new Australian Financial Complaints Authority after this financial year.

See ANALYSIS.