More effective explanations for insurance premium increases would help resolve disputes “early and fairly”, the Australian Financial Complaints Authority says.  

Flexible premium payment options should also be considered, according to the ombudsman.

AFCA says premium increase disputes grew as the overall number of general insurance complaints to the authority rose 17% to 34,231 in the year to June 30.

“Insurers can better explain premium changes, including the effects of external cost pressures on premiums,” the ombudsman’s annual review states. “We encourage financial firms to clearly explain the reasons for premium increases to their customers in as much detail as possible, to help them to understand why the premium has increased.”

CEO David Locke says persistently high numbers of complaints about general insurance show the sector has work to do, particularly when issues are “simply a claim delay”.

“Proactive and clear communication with customers can often be the very thing that stops a complaint from being escalated,” he said.

Add‑on insurance accounted for 7880 (23%) of general insurance complaints in the year.  

These products – such as consumer credit insurance, guaranteed asset protection, tyre and rim, and extended warranties – are sold alongside loans.  

Unfair sales practices, poor product design, inadequate disclosure and misrepresentation or undue pressure were flagged, mostly against nine companies including large banks.

“We identified possible systemic issues, reporting concerns to regulators about misleading practices, breaches of advice obligations, poor complaint handling and residual harm not addressed through earlier remediation,” AFCA says.  

Misleading information was the top industry problem, driving 7515 (22%) general insurance complaints, dominated by the add-on products. It was followed by delays in claims handling.

“The persistently high volume of insurance complaints highlights the need for further action by industry ... particularly where claim delays are the issue,” AFCA says.

By product, comprehensive motor insurance accounted for one-third of general insurance complaints, driven by shortages in parts and labour.

But AFCA says these challenges are not new and “more can be done by insurers to meet customers’ expectations – particularly through proactive, clear and timely communication”.

Insurers must address the causes of delays, review product offerings and communicate transparently so customers know why, and for how long, they must wait.  

“We’re calling on all financial firms to stay committed to early resolution and proactive engagement with their customers, particularly those experiencing financial hardship.”

Drawn out or poorly handled home insurance claims also cause ongoing harm, AFCA says.  

“We are concerned about delays in making claims decisions, undertaking assessments and repairs, and providing temporary accommodation.

“Sometimes insurers seek to cash settle when they should be finishing repairs. We also see insurers not recognising or responding appropriately to complainants who experience vulnerability.”