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Claim handling set to be hot topic for AFCA this year

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The Australian Financial Complaints Authority (AFCA) expects claim handling disputes are likely to be one of the top general insurance issues for this financial year as COVID-related impacts add to potential challenges.

Claims handling ranked third for general insurance complaints topics last financial year, but was close behind the top two issues.

“The year before that it was the most complained about issue, and we anticipate it is still going to be a very hot topic,” Senior Ombudsman Chris Liamos told the bi-annual member forum on Friday.

The expectation particularly reflects COVID and lockdown impacts that have caused challenges for insurers in dealing with claims, in combination with on-going pressures from natural disasters and significant events.

Mr Liamos says sourcing parts in the motor and home building areas has been difficult and following consultation with the industry and consumer stakeholders AFCA is finalising a fact sheet on home insurance claim delays and COVID.

Lead Ombudsman Insurance Emma Curtis said recent Datacube updates show a 15% rise in complaints about home building cover last financial year, a 13% rise for home contents, a 6% rise for motor and a 22% decline for travel.

“These figures indicate to us that natural disasters like significant bushfires, hailstorms and floods have driven home insurance claims,” she said. “And with families spending more time at home, insurers are probably also seeing more claims for accidental damage.”

The three most significant issues for home building insurance last year were claim denials due to exclusions or conditions, claim amounts, and delays.

Ms Curtis told the forum AFCA will move quickly to resolve business interruption disputes related to COVID-19 once the second industry test case on the issue is finalised.

The industry is hoping for a judgment this year in an expedited process, after the Full Court reserved an appeal decision earlier this month.

“AFCA is not a party to the test case, but we are ready to resolve the around 278 COVID-19 related business interruption insurance disputes once the outcome of the Federal Court appeal is known,” Ms Curtis said.