Annual Review 2023-24
Contents
- About this Annual Review
- Year at a glance
- Board Chair message
- Chief Executive Officer and Chief Ombudsman message
- Organisational overview
- Complaints
- Who complained to AFCA in 2023–24?
- AFCA Engagement with First Nations peoples
- Overview of complaints
- Open cases
- Closed cases
- Banking and finance complaints
- Buy now pay later
- Scam complaints
- Financial difficulty complaints
- Small business complaints
- General insurance complaints
- Significant events
- Life insurance complaints
- Superannuation complaints
- Investments and advice complaints
- Cryptocurrency
- Complaints lodged by consumer advocates and financial counsellors
- Complaints outside AFCA’s Rules
- Systemic issues
- AFCA’s Code compliance and monitoring function
- Engagement, awareness and accessibility
- Corporate information
- AFCA General Purpose Financial Report
- Glossary
Between 1 July 2023 and 30 June 2024
General insurance complaints received
Top five general insurance complaints received by product
|
Product |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
Motor vehicle – comprehensive |
4,104 |
4,386 |
5,791 |
8,296 |
10,204 |
|
Home building |
3,616 |
3,527 |
6,120 |
9,592 |
7,358 |
|
Consumer credit insurance |
723 |
506 |
951 |
1,951 |
2,774 |
|
Travel |
3,168 |
2,477 |
532 |
1,679 |
2,054 |
|
Home contents |
946 |
1,079 |
1,289 |
1,565 |
1,582 |
Top five general insurance complaints received by issue
|
Issue |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
Delay in claim handling |
3,521 |
3,126 |
4,804 |
7,953 |
7,470 |
|
Claim amount |
3,171 |
3,161 |
3,747 |
5,720 |
5,563 |
|
Denial of claim |
2,337 |
2,479 |
2,125 |
3,048 |
3,762 |
|
Denial of claim – exclusion/condition |
3,032 |
3,146 |
3,111 |
4,733 |
3,276 |
|
Misleading product/service information |
640 |
317 |
445 |
921 |
1,616 |
General insurance complaints closed
Average time to close a general insurance complaint in days¹
Stage at which general insurance complaints closed
|
Stage |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
At registration |
8,389 |
8,367 |
7,606 |
11,565 |
13,062 |
|
At case management |
5,791 |
5,999 |
5,691 |
9,753 |
10,352 |
|
At rules review |
1,440 |
1,350 |
1,700 |
1,708 |
2,521 |
|
Decision |
1,944 |
2,125 |
2,247 |
2,544 |
2,749 |
Time taken to close general insurance complaints
|
Time |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
Closed in 0-30 days |
4,002 |
3,684 |
4,089 |
4,982 |
6,457 |
|
Closed in 31-60 days |
6,162 |
5,324 |
5,529 |
8,403 |
8,587 |
|
Closed in 61-180 days |
5,793 |
6,863 |
5,742 |
9,072 |
8,424 |
|
Closed in 181-365 days |
1,525 |
1,786 |
1,556 |
2,726 |
4,560 |
|
Closed in more than 365 days |
82 |
184 |
328 |
387 |
656 |
Key complaint trends
General insurance complaints only saw a small increase
In 2023-24, AFCA received 29,335 general insurance complaints, marking a 5% increase compared to the previous year. While total complaints across all sectors rose by 8%, the rise in general insurance complaints was more moderate.
Motor vehicle insurance drives complaint numbers
AFCA received 10,204 Motor Vehicle Comprehensive Insurance complaints about this insurance product, making up 35% of all general insurance complaints received. Last year, motor vehicle comprehensive insurance made up 30% of general insurance complaints.
Claim handling delays remain the top issue
AFCA received 7,470 complaints about claim handling delays (25% of all general insurance complaints), though this figure represents a 6% decrease from last year. Complaints about claim amounts totalled 5,563 (19%), down 3%, while claim denials accounted for 13% (3,762) of total complaints. We also saw a large spike in complaints about claim handing delays in the second half of the year.
Resolution and timeframes
Complaint closures increased significantly
AFCA closed 28,684 complaints in 2023-24, a 12% rise compared to 2022-23.
Increased closures at early stages
At the registration and referral stage, 46% complaints were closed, a 13% increase from the previous year. At the case management stage, 10,352 complaints were resolved, up 6% and representing 36% of total closures.
Substantial rise in rules review closures
The rules review stage saw a 48% increase, with 2,521 complaints closed at this stage of the resolution process. This is in line with expectations because jurisdictional assessments overall were up across all products. You can read more about complaints outside our jurisdiction here.
Complaints resolved quickly
Over half of all complaints closed were resolved within 60 days, with 6,457 complaints closed within 30 days. Only 2% of complaints took more than 365 days to resolve, with these types of complaints reflecting the most complex issues.
Industry trends and challenges
Inconsistent progress in enhancing industry practice and performance
Throughout 2023-24, AFCA worked closely with insurers to promote earlier complaint resolution and quicker response times. We regularly provided feedback to insurers, identifying areas for improvement and sharing complaints data to help enhance industry practices and performance. While some progress has been made, it remains inconsistent.
Increase in complaints about misleading information
Complaints related to misleading product or service information rose by 75%, highlighting a need for greater transparency and clarity in insurer communications. Many policy holders continue to find policy documents challenging to understand, presenting an opportunity for insurers to improve product design and ensure clearer policy terms, especially given the evolving risks like natural disasters.
Enhanced use of technology
Manual processes can be overwhelmed by increased claim volumes. Insurers should leverage technology to improve communication with policyholders. Where delays are within insurers’ control, addressing these issues promptly is essential. AFCA may award non-financial loss compensation if an insurer’s actions or inactions cause significant inconvenience or stress.
Monitoring expert reports
The quality of expert reports needs better oversight. Many denied claims were based on substandard or poorly interpreted reports, and wear and tear exclusions often lacked a strong evidentiary basis. Insurers must prove, on balance, that wear and tear was the dominant cause of the loss, rather than relying on desktop reports without personal inspection.
Case study – Delays and unreasonable requirements
Background
The complainants held a home and contents insurance policy and submitted a claim for damage resulting from a major storm event. The insurer partially accepted the claim, but this acceptance was contingent upon the complainants completing certain maintenance tasks. The insurer also partially denied coverage for mould remediation costs, attributing the mould to atmospheric conditions and delays in the maintenance work. Additionally, there were disputes regarding the conduct of the insurer’s appointed builders and the scope of the required works.
Complaint
The complainants sought full acceptance of their claim and requested an extension of temporary accommodation payments, which had been depleted due to delays in completing the repairs.
Outcome
The AFCA panel, comprising an ombudsman, a consumer representative, and an industry representative, ruled that the insurer must repair the damaged areas, extend temporary accommodation beyond the policy’s 10% sum-insured limit, and pay a cumulatively total of $10,800 in non-financial loss compensation (the maximum allowed at that time) to the complainants.
The panel determined that the complainants’ home became uninhabitable due to mould, which worsened because of the insurer’s avoidable delays. It was deemed unfair for the insurer to enforce the accommodation limit when repairs were delayed by their own actions. The insurer was ordered to continue providing accommodation until all repairs and mould remediation were completed.
Compensation was awarded due to the significant stress and inconvenience caused by the insurer’s delays. Evidence showed that these delays led to further damage and impacted the complainants’ well-being, including one complainant having to sleep on a couch in a shed following a cardiac event, and the other being hospitalised partly due to the stress caused by the insurer’s handling of the claim.
The panel found that requiring the complainants to complete maintenance work before repairs commenced was unreasonable and placed an undue financial burden on them, especially as they were pensioners with limited funds and faced difficulties in finding tradespeople due to high demand. The insurer had not justified the need for these maintenance works prior to starting claim-related repairs, leading to unnecessary delays and worsening the mould issue.
Case study – Wear and tear as the dominant cause of loss
Background
The complainant held a comprehensive motor vehicle insurance policy with the insurer. He filed a claim after his soft-top convertible was damaged, alleging the damage occurred when a towel became trapped in the roof mechanism.
According to the complainant, the towel broke a part that controlled the electronic opening of the soft top. The insurer denied the claim, stating that the damage was caused by wear and tear, which is excluded under the policy.
Complaint
The complainant asserted that the damage to his vehicle was accidental and, as such, should be covered under his policy. To support his claim, he submitted a repairer’s report, which indicated that the damage was consistent with the towel becoming caught in the roof mechanism.
The insurer, however, conducted a comprehensive inspection and produced a detailed report, concluding that the damage was the result of a frayed and broken cable on the left side of the roof – a mechanical failure attributed to wear and tear. The report provided substantial evidence to support this conclusion, noting that it is widely recognised within the industry that cables in Porsche convertible roofs tend to fray and deteriorate over time. Additionally, the pliability of the towel was deemed insufficient to exert the necessary force to damage the cable or motor.
Based on this thorough analysis, the insurer’s findings pointed to wear and tear as the primary cause, contradicting the complainant’s claim of accidental damage.
Outcome
AFCA conducted a thorough review of the case and found that the damage was more consistent with wear and tear, as demonstrated in the insurer’s detailed report.
The insurer provided compelling evidence showing that the mechanical failure of the roof’s cable was due to gradual deterioration, a common issue in similar vehicles.
Given that the complainant’s policy explicitly excludes coverage for damage caused by wear and tear, corrosion or deterioration, AFCA determined that the exclusion was applicable in this instance. Consequently, the insurer acted within its rights to deny the claim, and the complaint was not upheld.
