The battle to minimise insurance complaints is far from over, despite a promising fall in disputes related to life insurers.

In its latest report, covering 2022-23, the Australian Financial Complaints Authority (AFCA) reveals that life insurance complaints fell 24 per cent to 1,898 cases and accounted for 2 per cent of overall cases lodged with the ombudsman. 

AFCA has cautioned, however, that premium changes and claim delays continue to be issues for the industry. 

It adds that the fall in life insurance complaints can largely be explained by a reduction in disputes involving the collapsed Youpla Group, which had operated funds providing funeral insurance, mostly marketed to Indigenous Australians or Aboriginal Australians. When the Youpla effect is removed, the year-on-year reduction for life insurance complaints is about 7 per cent.

Code prep pays off

Christine Cupitt, CEO of the Council of Australian Life Insurers, says the positive 2022-23 results come on the back of concerted efforts by life insurers, including through preparatory work to comply with recent revisions to the Life Insurance Code of Practice. 

“There’s no doubt that life insurers have made significant investments to improve the way they serve their customers, and that includes the implementation of the Life Code and everything that goes along with that — such as changes to policies, processes and systems, staff training, consumer information and disclosures,” she says. 

“There’s a whole wraparound of work that has happened to implement that Life Code, and we are really pleased that this is starting to be reflected in fewer complaints to AFCA about life insurers.”

These gains notwithstanding, Cupitt says life insurers cannot afford to be complacent given their important role in society to create “peace of mind” for people who are often at a low ebb as they experience grief over the loss of loved ones. 

“Life insurance is based on a promise, and life insurers are here to provide the protection and certainty that Australians need on their best and worst days.”

Claim delays the big concern

Beyond life insurance, the AFCA report card for 2022-23 still poses concerns for the insurance industry.

General insurance complaints rose by 50 per cent to 27,924, with almost 30 per cent relating to delays in claims. 

High complaint volumes were not primarily linked to claims from severe weather events and natural disasters, but stemmed from business-as-usual claims. 

Delays in insurance claims handling were also a problem in superannuation, with super complaints jumping 32 per cent overall. This included a 136 per cent spike in complaints about claim delays, especially regarding life insurance and total and permanent disability insurance.

The devastating floods that hit south-east Queensland and New South Wales in 2022 put significant pressure on insurers. The Insurance Council of Australia (ICA) has estimated that the floods caused almost A$7.4 billion in insured damages.  

Mathew Jones, the ICA’s general manager of public affairs, notes that the floods were the “costliest insured event” in Australian history “and created significant challenges for the insurance industry in addressing an extraordinary volume of claims across a wide geographic area”.  

“Following three years of La Niña conditions, the event tested the systems insurers use to respond to customers and raised issues such as a shortage of experts required to assess and manage flood claims, building labour and materials constraints, and the complexity of recovery and resilience programs delivered by both the Queensland and New South Wales governments,” he says.  

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