An insurer reversed its decision to deny a flood-damage motor claim – and retracted allegations of fraud – shortly after the policyholder took the dispute to the Australian Financial Complaints Authority and without any new information or explanation.

The insured motorist alleges the insurer only changed its position due to AFCA’s involvement – and pushed for compensation for the stress caused by the disputed claim and the "offensive allegation" of fraud.

Upon receiving the March 2025 claim, Suncorp arranged interviews and forensic testing and sought phone and financial records.

The insurer denied the claim in July, saying the complainant had failed to establish a valid claim, failed to take reasonable care to prevent the damage, breached his duty of utmost good faith and lodged the claim under fraudulent pretences.

An internal dispute resolution review upheld the denial in August.

The policyholder took the case to AFCA in September and AAI reversed its decision three weeks later, accepting the claim, waiving the $900 excess and offering $1,100 compensation for non-financial loss.

AFCA said it could not identify any new information obtained after the claim denial or an explanation for the insurer’s change of position.

“The insurer simply said it had agreed to accept the claim without further investigation while acknowledging the complainant’s emotional distress due to alleged unfair treatment.

“Given the above, the insurer appears to have accepted the claim only after AFCA’s involvement, and the specific reasons for that acceptance are unclear.”

The determination says "it would have been more reasonable" for the insurer to have reconsidered its position during the IDR review.

In ordering Suncorp to pay $1500 non-financial loss compensation, AFCA says the exchanged information "shows the complainant was subjected to a complete investigation, required to cooperate with interviews and information requests, faced the serious allegation of fraud, and felt the need to engage AFCA for the claim decision to be overturned.

“Given the nature of the investigation and length of the claim overall, I consider this delayed acceptance of the claim would have caused an unusual degree of stress and inconvenience."

But AFCA said there was insufficient information to conclude the original denial was incorrect or unfair.

It also said the determination was substantially in favour of the insurer, as it rejected several other demands for reimbursement by the complainant, including for a police check, hire-car costs, vehicle registration and other expenses.

Click here for the full ruling.