Insurance customers in hardship or a crisis such as a flood need “somebody to listen and to respond” rather than a chatbot, the financial services ombudsman says.

Australian Financial Complaints Authority CEO David Locke told a member forum that while insurers need to automate processes for efficiency and consistency of approach, there is a legal obligation to respond appropriately to customers in need.  

“There are times when we’re happy to be engaging with a bot or have an automated process. There are times when we’re not – and the times when we are not are when our home has just been flooded ... and you’re in panic mode.  

“Try to see the person behind the request. The danger with AI, the danger with automation ... is that when somebody is in a crisis, that’s when they need human intervention and human engagement.”

Mr Locke says AI is “fantastic for some things and less so for others”.

It will deliver efficiencies but does not always pick up sentiment and “some of the nuances around relationships”.    

Insurance staff should “try to look at this in a human way”.  

“Really, what people expect, and I don't think it is unreasonable, is to be able to talk to somebody and to at least get a proper hearing. We see a lot of issues where that doesn't happen.”  

AI can have inherent biases or develop them, and insurance executives are responsible for the ethics and fairness of their frameworks and algorithms, Mr Locke says.

“You cannot delegate your responsibility and your decision-making to AI. It will be a focus of AFCA in terms of our systemic issues work. It’s a hard time, and how firms respond will have everybody's attention.”    

He says insurers should proactively identify people who may have issues, rather than waiting for them to seek help.  

“If you’re a woman fleeing family and domestic violence, you won’t have all the documents with you. We have work to do on this as well, where the process becomes a hurdle.”  

Last year, AFCA received nearly 106,000 complaints – double the levels of five years earlier. 

Mr Locke acknowledges that delays in resolving the surge in cases have caused “real difficulty” for scheme members.

“I’ve been disappointed that we’ve had the sorts of delays we’ve experienced. That is not where we want to be at all.”  

AFCA’s workforce has increased by 40% in two years and it has brought in temporary “surge” staff to focus on particular issues. It has also rolled out new technology.  

The authority is “bringing the queues right down”, Mr Locke says, and it is working to have service standards “back within what you’d expect” by the end of June.    

“We’ve been engaging with firms around matters that are awaiting allocation to a case manager – looking at grouping matters and identifying whether there’s a particular theme.

“There are a lot of matters that come through to AFCA that really should be nowhere near the scheme.

“AFCA was never set up to provide resolution on some of the service and delay type issues. We should be handling matters where there is a significant dispute, rather than some of this process work.”

Insurers that recruit more staff to handle internal dispute resolution will “pay AFCA less because fewer complaints will have to come through to us. A lot of the time things can be resolved if you approach them with a resolution focus rather than a process focus.”