There were 1449 life insurance disputes lodged with the Australian Financial Complaints Authority in the year to June, down 24% from a year earlier. 

AFCA lead ombudsman for insurance Emma Curtis told a half-yearly member forum that life insurers are “clearly doing things right ... to be able to reduce complaints so significantly”.  

“My feeling would be that claims handling and product design, communication and distribution is improving, so it’s reducing frictions and issues,” she said. “The other thing might be that we haven’t seen significant premium increases. 

“That’s really great, that sounds like a fantastic story. However ... when we see such a significant drop and low numbers like this, it does make us pause to make sure that consumers know they have the ability to complain. 

“It’s probably worth life insurance doing a bit of a health check to make sure that they’ve clearly signposted to their customers the right to make a complaint.” 

The top five life insurance complaint causes were delays in claims handling (231 cases), incorrect premiums (176), denial of claims (165), claims amounts (111) and cancellation of policies (94). By product, the top five areas were income protection (540 complaints), term life (310), total and permanent disability (224), whole of life (117) and funeral plans (109). 

The number of complaints taking more than a year to resolve grew by 37% due to the increasing complexity of cases, often arising from the age of the insurance products in question and the additional time needed for parties to provide submissions, AFCA says. 

“Although life insurance complaints are a smaller segment of AFCA’s overall caseload, they are significant due to the complexities often involved,” the authority said. “Disputes frequently arise over claim denials, policy exclusions and delays in processing claims. 

“Consumers often struggle with understanding policy terms, leading to misunderstandings and complaints when claims are made.” 

AFCA says consumers have expressed frustration with perceived communication gaps and lack of clarity, particularly during times of illness or financial hardship.  

“Effective resolution of these complaints is crucial,” it said, adding “document retention remains a critical issue”, including applications, underwriting files, disclosure documents and policies.  

Ms Curtis said there is “lots of opportunity there for insurers to reduce the volume of those complaints by looking carefully at their claims handling process and identifying what fixes they can make to both speed up claim handling and also communicate with customers regularly about the progress of their claim if they're not able to speed up the process significantly. 

“We encourage insurers to expedite claims handling, particularly in relation to life insurance where there’s obviously a very significant underlying health event or life event that’s led to the claim being made, and particularly in relation to income protection claims, where the claimant is obviously often really reliant on that income benefit.”  

The industry code compliance committee is looking at the issue, she said.  

“It’s a focus area, and I would really encourage insurers look carefully at it to make sure that they’re not exacerbating any underlying stresses for their customers in relation to claims handling.” 

Ms Curtis said delays in general insurance and life insurance are due to “very different” issues, and in the life sector they are often connected with the need to collect information from experts before they can progress the claim. She urged an “empathetic process” and “above all, transparency and clear communication”. 

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