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Delays, denials and disputes are running at four times the rate of the previous worst weather event, says complaints authority.
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Flood-hit regions inundate AFCA with complaints about insurers
28 February 2023
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Flood-hit regions of NSW and south-east Queensland have made a record number of complaints about insurers to the Australian Financial Complaints Authority (AFCA) with delays in claim handling the top grievance.
AFCA had received more than 2,000 complaints in the year since the devastating storms and the dispute level was higher than for any event except COVID-19, it said.
Compared with the next most significant weather-related event – the south-east coast storms of February 2020 – there were four times the number of delays, denials and disputes.
“We are concerned by the volume of complaints that have been reaching us about delays by insurers,” the AFCA’s chief ombudsman and chief executive, David Locke, said.
“We understand that the scale of this event has put pressure on insurers but these sorts of complaints can often be avoided through good, regular communication with customers.
“We would also prefer to see insurers resolving many more complaints within their own dispute resolution process, rather than consumers having to take the extra step of coming to AFCA – prolonging the time they spend in limbo, unable to get on with their lives.”
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Delays in claim handling accounted for 37 per cent of the 2,021 flood complaints from NSW and south-east Queensland, denial of claims 33 per cent and disputes over amounts 26 per cent. Home building insurance accounted for 74 per cent of complaints, followed by home contents (9 per cent) and landlord insurance (5 per cent).
About three-quarters of complaints were closed by agreement or in favour of complainants and a total of $12.9 million in compensation and refunds was secured.
Only 40 per cent of flood complaints were resolved at the earliest stage of the dispute process, well below the overall level of 51 per cent.
The AFCA said it was also concerned about a rise in complaints about general insurance, with a 65 per cent increase so far this year to 17,163 compared with 10,417 at the same point in 2021-22.
The AFCA’s lead ombudsmen for insurance, Emma Curtis, said the sheer number of complaints meant the process was slower than usual.
“But we have increased our resources and capacity to handle insurance complaints significantly over the past year, and this is having a positive effect,” Ms Curtis said.
“By working closely with insurers to help them resolve simpler complaints early and take a consumer-centric approach, we are confident complaint volumes will reduce over time.”
AFCA had also instituted new ways to regularly update consumers on the progress of their complaints.
“We expect insurers to do all they can to assess claims promptly, to regularly inform customers about expected timeframes, and to clearly communicate about claims options,” she said.
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