The Australian Financial Complaints Authority (AFCA) has published its latest systemic issues report, flagging general insurance concerns around motor claims and failures to implement AFCA determinations.

Across all sectors between January and June, AFCA investigated 55 systemic issues resulting in more than $61 million being returned to 145,480 consumers. Seven of the issues related to general insurance and nine to life insurance.

One general insurance firm failed to take "certain actions" set out in an AFCA determination within stipulated timeframes.

“Where a complainant accepts a determination, it is binding on the financial firm,” the report says.

“AFCA takes it very seriously when a financial firm fails to give effect to an AFCA determination. AFCA is obliged under the Corporations Act to report such conduct to the appropriate regulators and in this case, AFCA reported the issue to ASIC and APRA, noting the firm’s failure to comply with the determination.”

The firm said the non-compliance was “inadvertent” and had arisen due to “an oversight or human error”.

But after an internal review the firm identified other complaints where it had not met determination timeframes.

AFCA also raised two motor insurance issues.

One insurer was found to be settling claims incorrectly by repairing vehicles or cash-settling when a vehicle had been stolen but recovered more than 14 days after the theft – rather than treating the claim as a total loss.

“When a complaint was lodged with AFCA, the insurer said it had identified human error as being the cause and therefore concluded the issue was not systemic,” the report says.

“When AFCA subsequently engaged with the insurer on the issue through its systemic issues team, it undertook a more comprehensive review of claims data and found that the issue was not an isolated incident.”

Remediation resulted in $6.7 million being returned to 260 impacted customers.

In another case, an insurer was not settling claims correctly under its lifetime new for old car replacement policy benefit.

The firm was settling claims without sourcing a replacement vehicle, and in some instances was providing a settlement based on a quote obtained by the firm, where a dealer discount had been applied. 

“These quotes were likely not actionable by consumers who would not be able to access dealer discounts and therefore, the consumers had not been indemnified appropriately,” the report says.

The financial firm revised its product disclosure statement and practices and conducted an internal review that identified 237 affected consumers. Remediation resulted in $655,442 being returned to affected customers.

Click here to read the report.