Complaints about delays in claims handling have more than doubled over the last four years, according to AFCA.
The authority says in its Annual Review that over the 2022–23 financial year, it received 1,898 life insurance complaints, which made up 2% of the nearly 97,000 total complaints it received.
AFCA’s report says that claims of misleading product or service information remained the most common issues raised by complainants, accounting for 19% of the total.
“Complaints about delays in claims handling rose from the previous year, accounting for 13% of the total, while complaints about incorrect premiums decreased, making up 11% of the total.”
AFCA’s table shows that the complaints about delays in claims handling had risen from 98 in 2018-19 to 245 complaints in 2022-23.
The authority urges insurers to review their claim handling practices and take steps to reduce the average time taken to make decisions about claims.
“Many people making a life insurance claim are in a vulnerable situation because of bereavement or illness, and need certainty of an insurance decision and the income stream if the claim is successful.”
The leading sources of complaints were:
- Income protection policies (523 complaints, or 28% of the total)
- Funeral plans (441 or 23%)
- Term life policies (347 or 18%)
- Total and permanent disability policies (210 or 11%)
It also notes the life insurance complaints number was 24% lower than in the previous year. But says this was, in part, due to a reduction in the number of complaints about four Aboriginal Community Benefit Fund companies (the Youpla group).
“When the effect of these is removed, the year-on-year reduction for insurance complaints was about 7%.”
AFCA closed a total of 1,468 life insurance complaints in 2022–23 and the average resolution time was 107 days, down from its five-year average of 114 days, and a reduction on the previous financial year.
Investment and Advice
As to Investment and Advice Complaints AFCA received 4,840 complaints
The Annual Review says a recent downward trend in complaints related to investment and advice products “…would have continued in 2022–23, if not for one-off surges in complaints to AFCA relating to two firms.”
“If the complaints against these two firms were excluded from the figures, total complaints in this category in 2022–23 would have fallen for a third successive year.”
Excluding complaints from the two firms mentioned, the top three products for complaints in 2022–23 would have been shares (589 or 24%), superannuation funds (292 or 12%) and cash management accounts (219 or about 9%).
