The Australian Financial Complaints Authority reported 17 general insurance systemic issues to regulators in the second half of last financial year, in a jump from previous periods.

Its Systemic Issues Insights Report, published twice a year, shows that across banking and finance, general insurance, life insurance, investments and advice, and superannuation, AFCA reported 48 such problems. It identified, investigated and resolved issues that affected 20,040 consumers, and $4.3 million of refunds were made. 

In general insurance, the number of problems reported to regulators increased from six in the half-year to December 2023 and seven in the year-earlier period. 

Other overall figures are not broken down by sector in the reports.

AFCA says the early identification and resolution of systemic issues can reduce complaints, minimise harm and benefit consumers who have not lodged complaints but who may have been affected.

“Our reports to regulators ensure they are promptly informed of issues within the industry and can take action as they deem appropriate,” it says.

The half-yearly reports include case studies aimed at improving practices, with the latest highlighting insurance issues such as inflexible processes around customer advocates, late responses during internal and external dispute resolution, and incorrect renewal of cancelled policies. 

Inflexible processes were applied by one insurer to all customer advocates, which hindered consumers seeking to appoint financial counsellors and other unpaid representatives to help with claim lodgement and management.

The insurer acknowledged the issue and updated its documents to distinguish between steps for authorising paid and unpaid representatives. It also held refresher training for front-line staff.

AFCA also highlights a case in which at least 7336 customers were affected by an insurer failing to provide requested information on time during internal and external dispute resolution.

The root cause was identified as pressure on the complaints handling team due to increasing dispute numbers, lack of resourcing and inadequate training and reporting.

Insurer responses included process changes, using external contractors to manage administration tasks, creating new roles to support front-line staff and deploying temporary resources to areas of concern.

“Based on the actions by the insurer, AFCA closed its file and reported the matter to the relevant regulators but will continue to monitor the insurer’s performance,” it says.

In another case, an insurer provided responses to AFCA outside external complaint resolution time frames 92 times over 12 months, and requested additional time on 48 occasions. 

The insurer confirmed a correlation between complaint volume rises in fiscal 2023 and staff resourcing, while travel policy complaints rose with a post-covid rebound in activity.  

Controls have been tightened, tracking procedures introduced and additional staff employed, the report says.

AFCA also flags an insurer that incorrectly renewed cancelled policies and deducted premiums without policyholder authority. This affected 108 cancelled policies, and 16 customers required $14,570 in remediation. 

“The root cause of the issue was a limitation related to two non-integrated systems. Based on the remediation and the corrective actions taken by the insurer, AFCA was satisfied the systemic issue was resolved.”