Life Insurance Minute Percentage of AFCA Complaints

While AFCA experienced another record year in 2023-24, with complaints rising 8% to 104,861, just 1.38% of these complaints were associated with life insurance.

AFCA’s latest Annual Review, which covers the period from 1 July 2023 to 30 June 2024, includes a comprehensive section on life insurance, which reveals the authority received a total of 1,449 life insurance complaints – down 24% from the previous year.

The authority’s annual data also shows that  IP policies were again the most complained about product (540 complaints) followed by term life (310) and TPD (224).

As to the top five life insurance complaints by issue, AFCA’s report details this as being delays in claims handling (231 complaints) followed by incorrect premiums (176) and denial of claim (156).

Of the 1,449 life insurance claims received, AFCA closed 1,411 complaints with the average time to close a complaint being 121 days (also see: Jump in Complaints About Claims Handling).

…although life insurance complaints are a smaller segment of AFCA’s overall caseload they are significant due to the complexities often involved…

Looking at the industry trends and challenges in the life insurance sector, AFCA says that although life insurance complaints are a smaller segment of AFCA’s overall caseload “…they are significant due to the complexities often involved.”

It notes disputes frequently arise over claim denials, policy exclusions and delays in processing claims. “Consumers often struggle with understanding policy terms, leading to misunderstandings and complaints when claims are made.”

AFCA also points to challenges in claim processing and policy terms.

“Complaints about claim denials often stem from individuals facing significant life events or medical issues, adding stress to an already challenging situation. Rising life insurance costs and cost-of-living pressures are contributing to an increase in disputes, especially regarding policy cancellations due to non-payment of premiums.”

…the Australian life insurance sector faces heightened scrutiny over transparency and claims handling…

It adds that the Australian life insurance sector faces heightened scrutiny over transparency and claims handling.

“Consumers have expressed frustration with perceived communication gaps and lack of clarity, particularly during times of illness or financial hardship. Effective resolution of these complaints is crucial.”

The authority also notes that document retention remains a critical issue.

“Ongoing complaints highlight the importance of insurers maintaining comprehensive records, including applications, underwriting files, disclosure documents and policies. Issues with document retention have led to disputes and should be managed effectively.”

In general of the 104,861 complaints received in the 2023-24 year, AFCA resolved 104,203 complaints, 21% more than in 2022-23. Complainants secured nearly $314 million in compensation and refunds.

Click here to download the full report.