'No contact': AFCA worried insurers neglecting dispute resolution duty

There are indications insurers are failing to meet their obligations regarding the resolution of claims disputes, the Australian Financial Complaints Authority (AFCA) says.

AFCA tells insuranceNEWS.com.au it registered 6819 general insurance complaints in August-October, a jump of 73% from a year earlier, and it is encouraging insurers to explore ways to improve their early resolution of complaints.

It is concerned about this rise in complaints being escalated to external dispute resolution (EDR) and about “insurers not meeting their EDR obligations,” Lead Ombudsman Insurance Emma Curtis says.

“We are particularly concerned when an insurance claim has been lodged with an insurer and the consumer comes to AFCA because there has been no contact from the insurer,” Ms Curtis said.

“We want to better understand the causes of these complaints and we are working with insurers to help them resolve disputes more quickly, and ultimately to prevent them.”

When AFCA receives a complaint, it registers it and then refers it back to the insurer to provide an opportunity to resolve it. If unresolved after 30 days it moves to AFCA’s case management and its investigating teams, with a case worker allocated.

The percentage of general insurance complaints resolved at initial registration fell to 44% in the year to June, a low rate of early resolution resulting in more complaints requiring investigation and a decision by AFCA.

AFCA’s website has a warning that allocation of general insurance complaints to the case management stage has been delayed by a “sudden and significant increase in insurance claims” as record floods led to significantly higher insurance complaints numbers.

It has boosted its general insurance team by 65%, is recruiting skilled insurance experts and dispute resolution practitioners, and has specialised teams prioritising natural disaster and financial difficulty complaints. These measures have led to “rapid improvements,” AFCA says, and the number of complaints awaiting allocation to a case manager has fallen.

“We are allocating these complaints to our expert complaint teams at a faster rate than we are receiving them,” it said.