After years of sharp increases in general insurance complaints, the numbers are plateauing. Figures recently released by the Australian Financial Complaints Authority (AFCA) show that for the last six months of 2024, the regulator received just under 13,000 complaints from consumers. However, motor vehicle and home building insurance policies are still the most complained about coverages.
The new statistics were announced at AFCA’s member forum earlier this month which also provided important intelligence for brokers around what’s most likely to result in complaints from customers.
“Complaint volumes have remained flat over the last six months of the last calendar year which is a really good outcome,” said Emma Curtis (pictured), AFCA’s lead ombudsman for insurance.
Curtis said, across the general insurance industry, the numbers “are really levelling out.”
She said AFCA would still like to see reductions but said this was likely optimistic given the current environment, particularly ex-Tropical Cyclone Alfred impacting parts of NSW and Queensland heavily.
A loss adjuster told Insurance Business he was dealing with a steady flow of these claims. “We don’t expect things to quiet down anytime soon,” said Brisbane based Mark Mellor, national CAT manager for Crawford & Company Australia.
Brokers could be well advised, if they are not already, to check in on any customers in a claims process as a result of this nat cat.
The second positive trend, Curtis said, is more insurance complaints are resolved before they reach the stage where AFCA starts to directly manage them.
“There’s been a 4% increase in resolution at registration and referral stage,” she said, “which is a really great result.”
The lead ombudsman said this shows that insurers – and likely brokers – are aligning with the regulator’s message about staying engaged with complaints and trying to resolve them “at all stages” and before AFCA needs to take them on.
However, one trend hasn’t changed.
“Motor vehicle and home building insurance policies are the most complained about products,” said Curtis.
The majority of these complaints concern directly sold insurance, but intermediated motor and home insurance policies are among these numbers.
“It's not surprising that motor and home are the most complained about products, because they're the most widely held products among Australian consumers,” said the lead ombudsman.
Despite being the most common insurance product, some recent surveys suggest that cost-of-living pressures have contributed to as many as 25% of Australians ditching their home coverage.
The Insurance Council of Australia (ICA) has also drawn attention to the growing problem of underinsurance among those who have a home coverage policy.
Together with the complaints volumes, these issues suggest that brokers could focus more attention on ensuring customers are accurately insuring their commercial properties and vehicles.
However, two insurance areas are seeing increasing numbers of complaints.
For consumer credit insurance (CCI), a form of add-on insurance, Curtis said compared to home and motor coverages, the complaints data “paints a different story.”
According to the ICA, CCI is usually sold by banks and other lenders and provides cover for consumers if they are unable to meet their minimum loan repayments due to unemployment, sickness or injury or to pay the outstanding loan balance upon death. CCI is optional and usually sold by lenders to consumers with a credit card, personal loan or home loan.
It’s also known as loan protection insurance, mortgage protection insurance, credit card insurance or personal loan insurance.
“We received just over 2,000 CCI complaints for that same period last year and that pushes the total number up to 15,000 complaints for general insurance,” said Curtis.
This “significant volume” is not a direct concern for insurance brokers focused on commercial offerings but’, as an insurance product, it’s likely worth being aware of this increasing issue.
The lead ombudsman, said AFCA, expects this trend to continue over the next few months.
Travel insurance complaints, said Curtis, “are a bit concerning.”
“I think that there's more that insurers can do around product design and claims management and disclosure in policy documents to help reduce those complaints in travel insurance,” she said.
Whatever the insurance product, the issues consumers are complaining about haven’t shifted.
“Delays in claims handling is still featuring as the number one issue complained about, followed by claim amount and denial of claim,” said Curtis.
She expected these challenges to be a “key issue” in the wake of ex-TC Alfred and called on insurers to try and resolve these complaints before they reach AFCA.
Are you an insurance broker? Do the insurance complaints from your customers match what AFCA is reporting? Please tell us below
