2020–21 Annual Review

Life insurance complaints

Between 1 July 2020 and 30 June 2021

Complaints received

1,623 complaints received

32% resolved at Registration and Referral stage

Top five life insurance complaints received by product 1
Product Total
Income protection 575
Term life 290
Total and permanent disability 184
Funeral plans 169
Trauma 115
Top five life insurance complaints received by issue 2
Issue Total
Incorrect premiums 213
Denial of claim 212
Delay in claim handling 172
Service quality 141
Misleading product/service information 109
Complaints closed

1,595 complaints closed 3

Average time to close a complaint 128 days

Stage at which life insurance complaints closed
Stage Total
At Registration 513
At Case Management 473
At Rules Review 104
Preliminary Assessment 225
Decision 280
Average time taken to close life insurance complaints
Time Total
Closed 0–30 days 10%
Closed 31–60 days 23%
Closed 61–180 days 45%
Closed 181–365 days 18%
Closed greater than 365 days 5%


AFCA can consider complaints about the following life insurance products:

  • consumer credit insurance
  • income protection
  • annuities
  • endowments
  • funeral plans
  • scholarship funds
  • term life policies
  • total and permanent disability policies
  • trauma policies
  • accidental death
  • whole of life policies.

The types of issues and problems AFCA resolves include:

  • premium increases where there is an allegation of non-disclosure
  • misrepresentation or incorrect application of insurance premiums
  • product information that wasn’t disclosed, or was misleading or incorrect
  • decisions a financial firm has made, such as denial of an insurance claim
  • complaints about an insurer’s decision to avoid or vary a policy on the basis of non-disclosure or misrepresentation
  • complainant’s instructions that weren’t followed
  • privacy and confidentiality breaches.

Between 1 July 2020 and 30 June 2021, AFCA received 1,623 life insurance complaints, making up 2% of the total complaints received. This is consistent with both the 2019–20 and 2018–19 financial years.

During 2020–21, there were 1,595 life insurance complaints closed.

Of the life insurance complaints closed, 513 were closed at Registration and Referral, 473 were closed at Case Management, with 280 progressing through to the final Decision stage. The average time taken to close these complaints was 128 days, reflecting complexity in denial of claims matters and complaints about the calculation of income protection benefits, although a third of these complaints were closed within 60 days.

The most common issues for life insurance complaints during 2020–21 were incorrect premiums (213) and denial of claims (212). This was followed by delays in claim handling (172), service quality (141) and misleading product/service information (109).

Complaints about incorrect premiums were commonly about the rate at which stepped premiums increase over time. These complaints are often exacerbated by financial firms not clearly explaining how stepped premium curves will affect future premium rates. AFCA encourages firms to provide clear and effective premium rate tables, or premium projections, to consumers at the point of sale or during renewal periods to help reduce the number of premium disputes.

AFCA continues to receive many complaints about the calculation of income protection benefits, especially for business owners and the self-employed. Around a third of life insurance complaints (575 complaints) were about income protection policies. AFCA understands the difficulties presented by complainants’ corporate and trust structures, and the complexities of business accounting.

Case study

The complainant said two men knocked on his door and told him they were representing an Aboriginal funeral fund.

The complainant noticed their van had Aboriginal designs and colours. The two agents said they were Aboriginal men.

The agents provided the complainant with a brief, verbal explanation about the funeral fund, with information about fortnightly payments that could be direct debited from their Centrelink payments.

The agents asked the complainant to sign ‘some papers’, which he did.

The complainant said the agents did not tell him about any other aspects of the funeral plan, including that contributions would likely exceed the benefit amount, that family members would not receive the entire benefit, and it would only cover the funeral cost, among other matters.

The complainant’s plan was cancelled in January 2019 because of non-payment of premiums.

The complainant sought a full refund of premiums paid in relation to the funeral plan, and said that representatives of the financial firm had engaged in misleading and deceptive conduct, unconscionable conduct and breached their duty of utmost good faith.

Findings and outcome

The complaint was considered by a panel. AFCA uses expert panels to make determinations about particularly complex complaints we receive. Panel members are appointed by the AFCA Board based on their objectivity, qualifications, experience and relevant personal qualities.

The panel found that the financial firm had sold the plan, unsolicited and by misleading a person who was vulnerable to mis-selling in these circumstances.

It was found by the panel that the complainant was misled by the financial firm’s use of words, colours and imagery, which were usually associated with Aboriginal and/or Torres Islander peoples. He was deceived by such images into believing what he was told by the agents. In fact, the financial firm was not an Aboriginal organisation and it did not represent community. It was a private company set up solely for the benefit of its shareholder.

The panel found the financial firm engaged in egregious, misleading and deceptive conduct in selling the plan to the complainant in these circumstances.

The financial firm was ordered by the panel to refund the complainant the premiums paid, with interest.

Case studies are used to demonstrate AFCA’s approach to an issue and have been simplified for length and clarity.

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Case study

The complainant was a self-employed mechanic working as a sole trader. The complainant broke his arm in late 2017. He made an income protection claim, stating he was totally disabled.

The complainant also had hernia surgery in March 2019. The insurer paid total disability benefits until May 2019.

The insurer said that the complainant was no longer disabled by his injury. The insurer made this assessment through surveillance that showed the complainant working on cars and financial records, which did not show a significant change to the income of his business.

The complainant said that his partner was doing the work in the business, that the business made money selling parts and assets, rather than mechanical work, and the insurer should continue to pay him benefits.

Findings and outcome

AFCA reviewed the surveillance footage and saw the complainant working unassisted on a vehicle for most of the day.

The complainant’s tax returns were also reviewed by AFCA, and they showed income that was broadly consistent both before and after he claimed to have been unable to work.

The complainant’s explanation that his partner took over their work as she was not a qualified mechanic was not accepted by AFCA. She also had other paid employment and did not appear to be doing any mechanical work in the surveillance video obtained by the insurer.

AFCA found the complainant was not totally disabled for work in the period from June 2019 to December 2019, by reason of his hernia or left arm condition and the insurer was not required to pay total disability benefits for that period.

Case studies are used to demonstrate AFCA’s approach to an issue and have been simplified for length and clarity.


1 One complaint can have multiple products.

2 One complaint can have multiple issues.

3 This includes 562 complaints received before 1 July 2020, and 1,033 received from 1 July 2020 to 30 June 2021.

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