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The 2017-18 Financial Ombudsman Service Annual Review has some good news for Australia’s insurers – it seems that general insurance disputes are down for the first time in two years.
While 14,252 reports were received, the FSO accepted only slightly over 60% of them. According to the report:
“[The FSO] accepted 8,603 general insurance disputes in 2017-18. This was 2% less than last year, following increases of 26% and 28% in the previous two years.”
Of all of these disputes, 170 involved general insurance brokers and their customers, typically centring on the amount paid in the claim.
Ninety-two per cent (92%) of all general insurance disputes related to domestic insurance. Additionally, 70% of all general insurance disputes concerned the FSP decision. As with the general brokers, in most cases this was related to an FSP’s decision to decline a claim or the claim amount requested.
There also appears to be a shift towards greater self-reporting in the industry. There were 8,772 self-reported breaches of the General Insurance Code of Practice, which marked a 75% increase from the 2016-2017 period.
Life insurance fared less well, with a 10% increase in disputes accepted over last year.
The report also highlighted a number of issues that the FOS has discussed with insurers. Making mention of the organisation’s work in tandem with the ASIC, issues around the sale of add-on insurance, particularly in relation to cars, were noted. Mental health-related policy sales and claims processing were also highlighted in the report.
Additionally, the FOS questioned whether cash settlements were always the best way to settle claims, with the report noting: “Often these settlements were insufficient to carry out repairs, and transferred risk to the insured person. Any cash settlement must be sufficient for the applicant to be returned to the position they were in before the loss or damage.”
