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.
In a significant development for Australia's agricultural sector, Rural Affinity has renewed its partnership with Munich Re Specialty - Global Markets under a new five-year agreement. This collaboration, which began in 2006, is set to enhance the availability and scope of agricultural insurance products across the country. - read more
WFI Insurance has reported a notable decrease in farm liability claims across most categories, signaling a positive trend in safety practices within the Australian agricultural sector. The insurer observed a 75% reduction in falls from height over the past year, alongside a 30% decline in impact injuries, marking the lowest level in four years. - read more
Elders Insurance is urging Australian farmers to prepare for another damaging summer, with claims data revealing the scale and financial impact of storm activity across the country's agricultural regions. Analysis of storm-related farm insurance property claims over the last two years indicates that summer accounts for the highest number of claims nationally. - read more
Insuregroup, a specialist insurance brokerage serving Australia's transport and logistics sector, has recently achieved a significant milestone by processing over 10,000 insurance policies since its inception. This accomplishment includes a 25% year-on-year increase in policy count, highlighting the escalating demand for comprehensive truck insurance solutions among Australian freight operators. - read more
In a significant move towards regulatory consistency, Queensland has transferred its heavy vehicle compliance responsibilities to the National Heavy Vehicle Regulator (NHVR). This transition aligns Queensland with New South Wales, Victoria, South Australia, Tasmania, and the Australian Capital Territory, all of which have already integrated their heavy vehicle regulations under the NHVR's oversight. - read more
Welcome to a pivotal guide dedicated to empowering you with the essentials of income protection insurance in Australia. As we navigate through times of uncertainty, safeguarding your financial wellbeing becomes not just a priority, but a necessity. Income protection insurance stands as one of the key pillars of financial security, ensuring a steady flow of income during periods when you're unable to work due to illness or injury. - read more
For many millennials, navigating the complexities of personal finance and future planning can feel like a bewildering journey. Among these financial responsibilities, life insurance emerges as a paramount consideration. More than just a safety net, life insurance can be the cornerstone of a sound financial strategy, providing peace of mind for both the policyholder and their loved ones. - read more
Life insurance is a crucial part of any comprehensive financial plan, providing peace of mind that your loved ones will be financially secure in the event of your passing. - read more
Life insurance, a contract between an insurer and a policyholder, is designed to provide financial protection to loved ones in the event of the policyholder's death. For parents, this protection takes on a new level of significance. The birth of a child heralds a profound shift in priorities, with a focus on safeguarding the future of one's family. Hence, understanding life insurance options becomes a crucial aspect of responsible parenting. - 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
Start Here !
Apply now for your free Insurance assessment and price comparisons!
Knowledgebase
Claim: A formal request made by the policyholder to the insurance company for payment of a loss covered by the insurance policy.
