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Travel insurance dominates virus-related complaints

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Travel insurance has the highest number of disputes linked to the novel coronavirus, accounting for more than 82% of cases lodged against the general insurance industry since the pandemic was declared in March.

When measured by industry type, general insurance dominated with a 38% share of the 4773 virus-related disputes lodged against financial services providers, the Australian Financial Complaints Authority (AFCA) said today in a statistics report for the 2019/20 financial year.

Of the 1813 virus-related general insurance claims received so far, more than 1500 are about travel insurance.

Overall for the 2019/20 year, consumers lodged 80,546 complaints against financial services companies, with credit products dominating at 43%, followed by general insurance on 24%.

AFCA says the disputes received represented a 13.7% rise in monthly complaints from the previous financial year. About $258.6 million was secured in compensation and refunds to consumers.

The dispute mediator resolved 78% of cases and 73% of the complaints were settled by agreement or in favour of complainants.

About 15,748 complaints were lodged against the general insurance industry, the second highest behind banks (28,411).

Delays in claim handling drew the highest complaints (3521), followed by claim amount (3171), denial of claim based on exclusion or condition (3032), denial of claim (2337) and service quality (1353).

The Financial Rights Legal Centre says the AFCA statistics, especially the ones on travel, mirror the cases it has been handling since the pandemic erupted.

“We too have had an abundance of calls regarding problems arising out of travel insurance claims, refunds and credit,” Policy and Advocacy Officer Drew MacRae told insuranceNEWS.com.au today. “Travel insurance made up 78% of COVID-19 related calls to our Insurance Law Service.

“We have also seen COVID-19 compounding issues faced by those experiencing insurance problems from the Black Summer fires and other catastrophes that occurred earlier this year.”

The Consumer Action Law Centre says the 2019/20 figures suggest insurers are still failing to give consumers who are in financial hardship fair treatment.

“This is very concerning because we expect financial difficulty to increase when short-term COVID-19 relief measures expire,” Policy Officer Tom Abourizk told insuranceNEWS.com.au. “The fact that 73% of complaints made to AFCA were settled in favour of the consumer indicates that internal dispute resolution processes are still not resulting in fair outcomes.

“The financial service providers are supposed to be the experts, they should not be making the wrong decision this often.”