Policy clarity around the risks covered is critical amid a rise in complaints this year related to natural disaster claims, Australian Financial Complaints Authority (AFCA) Lead Ombudsman Insurance Emma Curtis says.

“What we’re seeing sometimes is that there’s still glitches in the way that policies are drafted, so they’re not clear,” Ms Curtis told the Insurance Council of Australia (ICA) Annual Conference on Wednesday.

Ms Curtis says it’s important to be “really clear” if people aren’t covered for flood and about what that means for them and to help people understand what’s included or excluded, while AFCA decisions on disputes can point insurers to areas where clarity is needed.

“We will make decisions about what is fair in all the circumstances, so that if we think a policy term is unclear we may not interpret it the way that the insurer intended it to operate,” she said. “So, a lot of learnings can be taken from the way we make interpretations.”

AFCA has received 1250 complaints related to the March floods and an 89% increase in natural disaster complaints this year, mainly related to delays in claim handling, the amount and denials, she said. AFCA has also increased its general insurance complaint resources by 71% to deal with the influx.

Ms Curtis says policyholder expectations after a claim must be managed clearly and continuously to reduce frictions and frustrations, and insured vulnerabilities must be identified early, as the difficult environment since the record-breaking floods becomes a “new normal”.

“There have been two more flood events since the March event,” she said. “I know the supply chain issues, hopefully, will resolve but we don’t really know when that is, so for the moment this is the new normal, so I think we need to adapt and innovate to cope with this.”

Ms Curtis says the insurer non-response rate, where there’s been no initial response at the registration and referral stage of a complaint, is also too high.

“We’re very happy to give extensions, but we need to know that you need an extension. If we don’t get a response, we have to continue with the complaint,” she said.

Ms Curtis says the industry responded quickly after the March floods, getting to the affected areas and visiting people very soon after the event. AFCA had also been involved with the community forums in Queensland and NSW held by the ICA.