Complaints about delays in the handling of insurance claims jumped 76% in the year to June to be the most complained about issue across all financial services. 

The Australian Financial Complaints Authority (AFCA) says 10,996 complaints about delays in claim handling were lodged – representing 11.3% of a record 96,987 complaints across insurance, banking, superannuation and other financial services.  

Claims handling issues have persisted for well over a year, AFCA Chief Ombudsman and CEO David Locke says, urging insurers to “take the necessary steps” to ensure fewer policyholders take a complaint to AFCA. 

“It is disappointing that this continues to be a concern. While we acknowledge the challenges insurers have faced, the bulk of complaints in the past year were not about natural disasters but about regular claims,” Mr Locke said.  

“We are deeply concerned by the volume of complaints...We need to see a significant improvement from firms.” 

Only 912 claim delay complaints were associated with natural disasters. 

The Insurance Council of Australia (ICA) told insuranceNEWS.com.au it is aware of some delays in claims processing after it declared three insurance catastrophe events in 2022. 

"It must be noted the significant pressure last year’s floods put on insurers’ systems and processes, which are used to respond to all insurance claims, as well as a shortage of experts required to assess and manage claims and building and labour supply constraints,” a spokesperson said. 

“Insurers work hard to look after customers and to finalise claims as quickly as possible, but they are also required to complete all necessary reports to make an informed claims decision.” 

“This is reflected in AFCA’s own data,” ICA said, noting 70% of disputes that progressed to determination last financial year were found in favour of insurers. 

Insurance made up three of the top five most complained about issues during the year, with claim amount disputes making up 6.5% of all complaints, and disputes over denials of insurance claims due to exclusions or conditions making up 5%. 

In total, there were 27,924 general insurance complaints (29% of the total), and 1898 life insurance complaints (2% of the total). 

“This is why in April this year the Insurance Council announced it would undertake a review of insurers’ response to the 2022 floods, which will look to identify lessons learned – both from good practice and practices requiring improvement,” the ICA said.  

"The industry will be looking closely at the issues that have been reported as an opportunity to continuously improve outcomes for customers and the community.” 

Insurers’ response timeframes, resources deployed, claims handling, complaints handling, communication with policyholders, and engagement with stakeholders will all be examined as part of the independent review, which is expected to be completed in October.