By Ron Arnold, founder 11eight

Here is a question worth sitting with: what if the way the Australian insurance industry thinks about complaints is itself the problem?

Not the volume of complaints. Not the complexity of the products or the mountain of rules and regulations to be complied with, but the fundamental mental model that treats a customer complaint as a problem to get rid of, a compliance exercise with steps to follow, or as yet another customer who does not understand what they are covered for or how insurance pricing and underwriting work.

What if that framing is holding the industry back?

The evidence is accumulating

In its December 2024 report Cause for Complaint: Complaints Handling in General Insurance, ASIC concluded that “a key driver for the most serious issues was an absence of a positive complaints management culture” and that insurers “failed to identify one in six customer complaints” within their own systems.

More recent data from the General Insurance Code Governance Committee highlights that the complaints dynamic is deteriorating.

In 2024-25, code subscribers recorded about 1.8 million internal dispute resolution complaints, up just over 30% year on year, with almost 60% relating to buying insurance and motor the most complained-about class.

Claims handling remains the largest area of non-compliance, accounting for close to 60% of all reported code breaches, with communication and time frames the most frequently missed commitments.

Alongside this, complaints linked to financial hardship and vulnerability are growing faster than complaints overall, suggesting the pressure is most acute where customers are least able to absorb it.

There are also gaps in complaint recording and a limited ability to measure delays, pointing not only to volume but also to how complaint and claim delays are understood and monitored within organisations.

These patterns are not just about performance against the code. They are a window into how the complaints experience is designed – or not designed – today.

My hypothesis

What if complaints management, as a discipline and a function, has been misclassified?

For many insurers, complaints sit somewhere between compliance obligation and a bolt-on operational process. They are “managed”; processed, tracked, closed and reported. The approach is sensible enough. Success is often defined in terms of compliance and process metrics, and what does not happen.

What if complaints were instead treated as a service, as a core and intentional part of what an insurer delivers to its customers, leading to a better reputation and stronger loyalty and retention?

This shift could transform complaints from a bolt-on cost centre – growing rapidly to respond to ballooning complaint numbers – into a strategic advantage, fostering deeper trust and long-term relationships.

The distinction is more than semantic. A service is something you design. Something you invest in. Something you measure for quality, not just compliance and completion. Something that has an owner, a standard and a genuine commitment to the experience of the person on the receiving end.

If complaints were treated with the same intention and rigour as marketing, pricing, underwriting, distribution and digital platforms, would the outcomes look different?

My suggestion here is they probably would.

What shifts when the frame shifts

Consider what changes when an insurer moves from managing and processing complaints to servicing them.

First, the complainant is no longer an adversary. In the managing and processing frame, the complaining customer is a problem to be resolved and closed. In a service frame, they are providing valuable feedback and an opportunity to demonstrate that the relationship can withstand a difficult moment. Customers who feel genuinely heard are less likely to seek outside intervention, not because escalation is discouraged, but because it is less necessary.

Second, access is easy. Servicing complaints begins with making it simple for customers to lodge a dispute – online, any time, without having to hunt for forms. It means providing structure, clarity on needed information, expected time frames and progress updates. And access is more than just the complaint form. It means making reports, correspondence, online chats and call transcripts readily available so the customer can support their complaint.

Third, complaints have a senior owner, and that ownership is explicit. The owner has a mandate, authority, a budget and a clear reporting line to the executive decision-making process. Ownership at this level tends to change how prioritisation, staffing and design decisions are made.

Fourth, resolution becomes part of the service offering. It is not a bolt-on process. It is designed from a user perspective and has experience-based standards, not just throughput-based ones. Compliance and process metrics still matter, but they sit alongside measures such as resolution quality, perceived fairness and customer effort. The internal conversation shifts from “How quickly did we close this?” to “How well did we make this right, and how hard did the customer have to work?” Why wouldn't an insurer have a net promoter score or customer satisfaction score for complaints?

Fifth, complaints become intelligence, not just incidents. Across the industry, internal and external complaints now constitute an extraordinarily rich data set. Every complaint is a clue to product fit, a process breakdown or an expectation mismatch. Modern analytics and AI can organise and analyse these signals at scale, surfacing patterns, pinpointing systemic issues and identifying opportunities for improvement far faster than manual review alone. Organisations that do this are not only resolving complaints, they are informing product, pricing and operational design decisions with real-world evidence.

Finally, culture follows. ASIC pointed to culture as a root cause of poor complaint performance, but culture rarely changes in isolation. It shifts when beliefs about what complaints represent change from evidence of failure to evidence of engagement. When leadership views a well-serviced complaint as a service achievement, and celebrates it with the same energy as other results, the behaviours that follow will look different.

The counterintuitive truth

Here is a paradox worth naming. Organisations that invest in complaints as a service may not always see complaint volumes fall straight away. Indeed, they may rise, at least initially.

What may change first is timing and trajectory. More issues surface earlier, are resolved at the first instance and do not progress to external dispute resolution or third-party representation.

Customers who feel the process has been easy, fair and transparent, even when the outcome is not what they hoped for, are unlikely to go further and will remain.

Then, as the volume and quality of insights increase, complaints start to drive more robust conversations about product and service design – sometimes including confronting discussions about what needs to change, whether that is product coverage, customer communications or key process steps.

An invitation, not a prescription

None of this suggests the current environment is simple. Complaint volumes at this scale sit alongside real pressures: affordability challenges, events creating large numbers of claims, supply chain delays and failings, and workforce challenges. A reframe on its own does not solve those.

But the hypothesis stands: if complaints are treated primarily as a problem to be processed rather than a service to be delivered, the underlying trajectory is unlikely to change. Regulatory expectations will continue to ramp up, more regulation may come, volumes are unlikely to fall meaningfully, and the distance between insurer and customer will remain a space others can occupy (such as claims chasers).

The question worth asking at the board level, executive level and wherever the customer experience is designed is a simple one: are we managing and processing complaints, or are we servicing them? And if the answer is closer to the former, what might change if that frame shifted, even slightly?