AFCA Criticizes Insurance Industry Over Delayed Dispute Resolution
AFCA Criticizes Insurance Industry Over Delayed Dispute Resolution
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
The Australian Financial Complaints Authority (AFCA) has expressed its deep concern on the rising complaint numbers and poor industry response, leading to significant dispute resolution delays.
The CEO and Chief Ombudsman, David Locke, warned that complaint numbers could reach 100,000 in the current financial year, an increase from 72,358 in the previous year.
The surge in complaint numbers resulted from natural catastrophes, complaints about claims handling and an increase in banking sector-related scams.
The delayed resolution of complaints has resulted in significant frustration among policyholders, brokers, and other stakeholders. Insurance brokers have reported extensive delays, with one residential claim taking as long as nine months to be resolved. The issue has been ongoing for a while, with AFCA issuing an apology last year for the protracted delays. However, the problem has persisted.
AFCA is worried that the continuous rise in volumes of complaints – most notably delays in claim handling – will hamper its ability to resolve disputes promptly and efficiently. Thus, Mr. Locke advocates that firms focus on exploring ways to resolve complaints in the early stages of their process, or before they reach AFCA.
He notes that fewer complaints are being resolved after referral back to the financial firm, while more members are asking for extensions or not responding to complaints within the timeframes outlined. The Internal Dispute Resolution (IDR) is the first step, while External Dispute Resolution (EDR) was not designed to be "the only avenue for redress." Nevertheless, Mr. Locke insists that deep concern exists with firms not meeting their IDR and EDR obligations.
AFCA is undertaking several steps to tackle delayed dispute resolution, such as using technology solutions to expedite processing, reassigning staff to high-impact product areas, batching complaints and standardizing responses, and regularly updating complainants on the status of their complaint. However, these efforts will come at a cost to members.
AFCA's annual review for the year to June 30, 2022, noted that it takes an average of 72 days to close a complaint, but this statistic includes all complaints, not just those that go to determination. Around 3% of complaints take more than a year to resolve. The Insurance Council of Australia has acknowledged that the record flood event last year, which resulted in almost 240,000 claims, was an already stretched system of claims.
Finally, a lot more disputes have been resolved through internal dispute resolution processes, and the industry will pay close attention to the issues brought out through the external AFCA process. Therefore, the financial services industry needs to tackle the issue of delayed dispute resolution to ensure that complainants' expectations are met, customer satisfaction is guaranteed, and the industry's reputation remains solid.
Published:Monday, 20th Mar 2023 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
The Australian Medical Association (AMA) has recently highlighted concerns regarding the substantial market power wielded by private health insurers and its potential adverse effects on patient care and healthcare costs. In a position statement released on 4 February 2026, the AMA emphasised the need for regulatory reforms to prevent insurers from exploiting their dominant positions in the healthcare sector. - read more
Recent findings from the Australian Medical Association (AMA) reveal a concerning trend in the private health insurance sector: Australians are facing higher premiums while experiencing diminishing returns on their policies. The AMA's latest Private Health Insurance Report Card, released on 5 December 2025, highlights the urgent need for reforms to address these issues. - read more
Private health insurers in Australia are facing mounting criticism for implementing significant premium increases, despite explicit warnings from the Health Minister. This development has sparked concerns about the affordability of healthcare and the practices employed by insurers to maximise profits. - read more
In August 2025, AIA Australia, a leading life, health, and wellbeing insurer, took a significant step in addressing the nation's mental health crisis by partnering with the City2Surf event in Sydney. This collaboration aimed to raise both funds and awareness for mental health, a pressing issue that has seen a notable increase in related insurance claims over recent years. - read more
In July 2025, AUSactive, Australia's peak body for the exercise and active health sector, announced a strategic partnership with Private Healthcare Australia (PHA) aimed at reforming private health insurance to include evidence-based preventive health services. This collaboration follows recent legislative changes that permit private health insurers to offer rebates for select natural therapies, marking a significant shift in the integration of preventive health into the insurance framework. - read more
The horizon of the insurance industry has undergone a transformative shift with the advent of digital technology. With a few clicks, consumers can navigate the once-complex world of insurance policies from the comfort of their home. The digital landscape for insurance services offers unprecedented access to information, comparisons, and instant communication, fostering a more empowered insurance client. - read more
As the landscape of finance and personal security evolves in Australia, the importance of being insured has never been more prominent. In a world of changing family dynamics, economic pressures, and higher living costs, life insurance stands as a bastion of support ensuring the well-being of loved ones in the event of unforeseen circumstances. - read more
Life insurance is a fundamental component of a robust financial plan, yet its significance is often underestimated. It serves as a safety net, ensuring that your loved ones are financially secure in the event of your absence. Understanding life insurance is the first step towards safeguarding your family’s future. - read more
Life insurance and estate planning are critical components of financial security. They ensure that your loved ones are protected financially when you are no longer around. By understanding these tools, you can take significant steps to secure your family's future. - read more
The digital age has fundamentally transformed how we approach almost every aspect of our lives, including the way we shop for life insurance in Australia. Gone are the days when one had to schedule meetings with insurance agents or flip through pamphlets to understand life insurance policies. Today, obtaining life insurance quotes online has become the norm, offering a hassle-free and incredibly accessible platform for individuals to safeguard their financial future. - read more
Start Here !
Apply now for your free Insurance assessment and price comparisons!
Knowledgebase
Insurance broker: An agent acting on behalf of the insured (not the insurance company) who negotiates the terms and cover provided by the insurer in the insurance policy.
