Claim handling delays were a factor in almost one-quarter of the 8827 general insurance disputes lodged with the Australian Financial Complaints Authority in the three months to September 30.

“Our objective is clear. AFCA expects a material reduction in complaints, particularly those about claim delays, and we urge the industry to take effective action,” lead ombudsman for insurance Emma Curtis told a member forum today.

“We’re not seeing a material reduction in complaint volume, and this concerns us. The industry must address the underlying causes of customer dissatisfaction and resolve issues before they are escalated to AFCA.”

The number of general insurance complaints fell 1% to 26,364 in the year to June 30, excluding those related to add-on consumer credit cover.

AFCA says numbers have remained stable in recent months amid “relatively favourable” weather.

“But this is not sufficient,” Ms Curtis said. 

In the latest quarter, the most problematic insurance products were motor (3507 complaints), home building (2104), consumer credit insurance (808), travel (547) and home contents (480).

Leading complaints by line and type (Q1)

The main issues were claim handling delay (2036 complaints), denial of claim (1431), claim amount (1347), misleading information (855) and exclusion/condition claim denial (846).

AFCA says improvements arising from automation have been uneven and “persistent delays, fragile search models, inconsistent communication and gaps in oversight of third parties continue to undermine customer experience”.

Ms Curtis says many staff “remain underprepared for the complexity and the human impact of claims work. Automation, which is intended to streamline processes, can inadvertently introduce new risks such as communication failures and lack of alignment between teams.”

While companies that plan for surge events, cross-train teams and use claims triage are delivering faster, fairer outcomes, Ms Curtis says the “challenge now is to ensure these improvements become standard practice, not isolated examples”.

AFCA says the average time taken to close complaints has improved, though 42% were dealt with in the early case management stage – indicating many could have closed earlier.  

Senior ombudsman Chris Liamos told the forum the “trademarks” of good claims handling are meaningful, clear, consistent and regular communications; a consistent point of reference; robust processes that can adapt; fair decisions supported by information shared with the claimant; transparency; and internal dispute resolution practices that engage, consider specific concerns, and respond “appropriately and mutually”.

After recent industry consultation, AFCA will soon publish a paper on claims handling with a framework for its approach to the area, to “help set expectations”.