The Australian Financial Complaints Authority (AFCA) recently reported receiving a record 30,000 general insurance complaints in 2023-24. One third of those complaints concerned motor insurance, which replaced home insurance as the most complained about insurance product.
However, at the same time, AFCA CEO David Locke (pictured immediately below) announced a very ambitious target: zero complaints.
“I’m pleased to share with you our new vision: Towards an Australia free from financial disputes,” said Locke in last month’s AFCA Member Forum. “It is a bold vision, and we cannot do it alone.”
The CEO also called on insurers to more effectively use their internal dispute resolution (IDR) processes so less complaints reach AFCA in the first place.
“I have said before that responsibility for handling your customers’ complaints sits with you, our members,” he said.
What do insurance brokers make of the regulator’s surprisingly ambitious target? Insurance Business reached out to brokers to find out.
“Not a fan, Jan!” said Laura Meyer (pictured top), an independent broker in Creswick, Victoria.
The director of Meyerinsure was concerned that what this new vision could lead to is the regulator leaving the complaints process to insurers.
“I guess my instinctive reaction to that statement is to worry that, without AFCA, we risk a complete imbalance of power,” she said.
Meyer said insurers are the “big guys” in any dispute.
“The client - and to a similar extent, their brokers - are not equal players by any stretch of the imagination, especially if you’re a small broker like myself!” she said.
Without an independent arbiter, Meyer said, customers will suffer.
“We already know insurers are already less likely to find in favour of an insured via an IDR process,” she said. “I feel if AFCA was to step back and put its hands up with a ‘not our problem, sort it out yourself’ approach, they will only dig their heels in further and customers and brokers alike are going to struggle to resolve disputes.”
Landis Michaels (pictured immediately below) was more confident in the regulator’s intentions.
“AFCA’s renewed vision is one we expect the industry to support and one we encourage,” said Sydney-based Michaels, who is practice leader of Bellrock’s executive and professional risk team.
He said the current economic environment is “unfortunately” the cause of customer distress and this is reflected in the complaints statistics.
However, Landis also pointed out that the effectiveness of IDR schemes depends on resourcing.
“Smaller to medium size firms may lack the human capital and financial resourcing to effectively and adequately manage complaints to the satisfaction of customers,” he said.
He encouraged industry colleagues to engage early with customers when a complaint arises.
“Even where disputes may not resolve, preserving the relationship with the customer can assist with the parties’ attitude to resolution later in the process,” said Landis.
Daniel Berry (pictured immediately below) expressed the hope that AFCA’s vision is achievable.
“I have hope that this is an achievable vision,” said Berry, a partner with Lismore-headquartered brokerage Dudgeon Berry Insurance Group.
He said claims that go wrong and become disputes cost precious time for everyone involved.
“It does become frustrating when, for example, a claim of low quantum is being disputed and there may be equal opportunity for an insurer to approve it or deny, yet they decide to buckle down and maintain their denial,” said Berry.
These can take weeks or months in an internal dispute resolution process, he said.
“It would be great to move toward this vision for all parties involved who are in dispute,” said Berry.
Alex Rowland (pictured immediately below) said his brokerage acknowledges “the critical role” AFCA plays resolving insurance disputes and, in that process, collecting information that can inform best practice.
“General insurance brokers, as well as our insurer partners, should welcome this opportunity to take guidance from AFCA,” said Rowland, an executive director of Willis Temby Insurance Brokers in Perth. “We completely agree that responsibility for the clients’ experience rests with us as a collective and we should always be striving for improvement,” he said.
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