While more than 1,500 complaints about life insurers were made to AFCA in the last financial year, the figure is a tiny fraction when compared to the 100,000 made to the independent dispute resolution authority.
The organisation’s 2024-25 annual report shows that denial-of-claim disputes remained the biggest issue and TPD complaints also climbed, up 43% in the 12 months to 30 June.
Among these were 72 superannuation complaints that were paused while litigation and subsequent legislative changes took place. AFCA later relodged them as life insurance complaints in its non-superannuation division, “…enabling the complainants to have their complaint reviewed and resolved”.
Life insurance complaints
During the year, AFCA resolved 18% of cases at the referral stage – down 12% from the previous year.
“We encourage life insurers to ensure they are adequately resourced to resolve complaints at this early stage,” the ombudsman stated in its report.
A total of 1,645 life insurance complaints were closed at the case-management stage, accounting for 67% of all closures – “a significant increase on the previous year”.
Almost half of the closed cases were more than 365 days old, largely due to the 1,074 complaints against the Aboriginal Community Benefit Fund entities that had been paused following the group’s liquidation.
Life insurance
Life insurance made up a small proportion of the total number of complaints made to AFCA during the year. In total, 1,518 complaints were made about life insurance, with banking and finance sitting topping the list at 54,581. Complaints about super sat at 6,164.
While life insurance matters represent only a small segment of AFCA’s overall caseload, the ombudsman said their complexity amplifies their impact.
“Complainants are usually suffering an illness or injury, or struggling to understand policy terms or a claims denial decision by the insurer,” AFCA said.
“This is particularly the case with income protection claims, which can be very stressful if those benefit payments are needed to meet living expenses.”
AFCA also continues to receive complaints where parties disagree over policy terms.
“Sometimes the insurer has not retained critical policy documents such as applications, underwriting files, disclosure documents and policies,” stated the report.
“It is crucial that insurers maintain robust record-keeping practices so they can properly assess any claim and reduce the risk of complaints arising. If there is a complaint, ready access to these documents is essential for early and efficient resolution.”
Another trend was income protection complaints from self-employed policyholders, “…usually due to disagreements with their insurer about their pre-disability income”.
AFCA urged insurers to reconsider policy design to help reduce these disputes.
The organisation paid $390m in compensation to consumers during the year and currently has 29,000 open cases.
