General insurance complaints jump 50%
General insurance complaints jumped 50% to 27,924 in the year to June, with claim handling delays again the top issue complained about at 28% of the total, the Australian Financial Complaints Authority (AFCA) says.
The latest report card from the dispute resolution service says claim amount complaints came next, at 20%, followed by denials of claims due to exclusions or conditions, which made up 17% of the total complaints for the year.
“We saw a marked increase in general insurance complaints. There was a notable increase in complaints about insurers’ services, along with a general increase in other areas such as claim denials,” AFCA said.
“Delays resulted in increased complaints about insurers’ services, primarily driven by ineffective communication with policy holders.
“We have seen a sustained level of complaints that have continued now for more than 12 months and which do not look to be slowing.”
While some delays are inevitable amid pressure on scarce supplies and labour, AFCA says maintaining consistent and informative communication with customers helps to avoid complaints or resolve them sooner.
AFCA said the industry shifting resources to manage record claims from significant weather events led to further delays, and issues with supply chains due to international events also led to delays in claims handling.
However, the jump in complaints stemmed from ‘business as usual’ claims and was not primarily linked to claims from severe weather events and natural disasters like floods.
"We saw a notable decline in performance by industry to address and resolve complaints before they reached AFCA or in the early stages of the AFCA process. Insurers were also less responsive in their interactions with AFCA, as reflected in the rise of overdue responses, extension requests and non-responses to AFCA,” the Authority said.
AFCA acknowledged a range of factors had created challenges for the insurance sector but said the “reality of climate change means these events will likely become more common,” and being able to juggle business as usual claims with natural disasters “must be part of the way we all work”.
It received 2468 complaints following record flooding in Queensland and NSW in February 2022. Delay in claim handling and the denial of a claim due to an exclusion or condition accounted for 35% and 33% respectively. AFCA resolved 1997 complaints.
AFCA has worked closely with the insurance sector over the past year to encourage earlier complaint resolution and better response rates. It provided feedback to insurers, including “our concerns about where we think performance can be improved,” and shared complaints data to help the industry improve.
“We share what we hear from consumers, such as their frustration at not being able to easily contact their insurer, and dealing with uncertainty about wait times, claim progress and outcomes,” AFCA said.
"Together, we are confident we can find sustainable solutions to reduce the number of general insurance complaints lodged at AFCA, which will benefit both consumers and general insurers,” it said.
AFCA says it received 401 covid-related business interruption insurance complaints by the end of June, issued 24 decisions and resolved 220 complaints while around 117 complaints remain open.
“We have placed around 100 on hold until the class actions in the Federal Court that affect these complaints are finalised,” AFCA said.
Of the total, 25,570 complaints were closed – 45% at the Registration and Referral stage and 10% at the final decision stage. It took 85 days on average to close a complaint.
AFCA says 29% of complaints were closed at the Case Management stage, 7% at the Rules Review stage, and 10% at the Preliminary Assessment stage.
Click here for the AFCA annual review’s general insurance section.