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 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.

Share this news item:

Insurance News

Clear

Allianz Australia Penalised for Misleading Travel Insurance Information

15 Jan 2026: Paige Estritori

In a significant ruling, the Supreme Court of New South Wales has imposed fines totaling $16.8 million on Allianz Australia Insurance and its subsidiary, AWP Australia, for disseminating misleading information about their travel insurance products between 2016 and 2018. This decision underscores the critical importance of transparency and accuracy in the insurance sector. - read more

Surge in Medical Claims Among Australian Travellers Highlights Importance of Comprehensive Insurance

15 Jan 2026: Paige Estritori

In 2024, medical incidents emerged as the leading cause of travel insurance claims among Australian travellers, accounting for more than 40% of all claims handled by nib Travel. This trend underscores the critical importance of securing comprehensive travel insurance to mitigate the financial risks associated with medical emergencies abroad. - read more

Seafood Business Wins Insurance Dispute Over Storm-Induced Power Outage

15 Jan 2026: Paige Estritori

A recent ruling by the Australian Financial Complaints Authority (AFCA) has significant implications for businesses seeking insurance compensation for losses due to power outages caused by natural disasters. In this case, a seafood distribution company experienced substantial stock losses when a storm-induced power outage left its refrigeration systems inoperable for a week. The insurer initially denied the claim, citing a flood exclusion clause. - read more

Insurance Council Advocates for Liability Law Overhaul to Curb Rising Premiums

15 Jan 2026: Paige Estritori

The Insurance Council of Australia (ICA) has called for urgent reforms to civil liability laws to address the escalating costs of liability insurance premiums affecting businesses nationwide. In a recently released white paper, the ICA highlights the need to review state-based civil liability laws that have remained unchanged for nearly 25 years. The report identifies key areas requiring attention, including psychological injuries, worker-to-worker claims, and leisure and recreational risks. - read more

Australian Insurers See Profit Surge in Q3 2025

14 Jan 2026: Paige Estritori

In the third quarter of 2025, Australian general insurers reported a significant after-tax profit of nearly AUD 2.3 billion, marking an increase from approximately AUD 2.1 billion in the same period of 2024. This uptick reflects a combination of rising premium revenues and a reduction in claims, contributing to the industry's robust financial performance. - read more

Click for more Insurance News