Add-on insurance complaints are not winding down in Australia – they are accelerating. The complaint pipeline is growing at precisely the moment the external complaints window for older policies is narrowing, creating a specific operational pressure on firms that have not resolved legacy exposure. Claimo’s latest campaign directed at frontline and public sector workers is one expression of that dynamic.
In 2024-25, complaints lodged by paid representatives reached 9,429, a 93% increase from the prior year and the highest volume ever recorded, accounting for 9% of the Australian Financial Complaints Authority’s (AFCA) total complaint volume. Add-on insurance complaints represented 23% of all general insurance complaints received by AFCA that year and were the primary driver of a 17% increase in total general insurance complaints to 34,231. Excluding add-on insurance, general insurance complaint volumes remained broadly stable across the same period.
Claimo, a claims management firm operating on a paid representative basis, is directing frontline and public sector workers to review historical credit agreements for mis-sold add-on insurance. The campaign follows a 9News segment featuring Andrea Wallace, a Victorian nurse and single mother who recovered approximately $8,981 after add-on insurance was identified within two novated leases she had previously held.
Internal modelling cited by Claimo estimates that up to one million current and former frontline and public sector workers may have grounds to seek refunds, with total potential exposure calculated at approximately $3.4 billion and average individual refunds estimated at approximately $3,400. The estimate covers add-on insurance, consumer credit insurance (CCI), and other financial products historically bundled with car loans, mortgages, personal loans, credit cards, and novated leases held over the past 16 years.
Claimo director Nathan Mortlock identified novated lease arrangements as a particular area of exposure, given how they were sold through workplace salary packaging schemes. “Novated leases were commonly promoted as tax-effective, particularly to public sector workers. But tax-effective does not automatically mean cost-effective. Some people may have been paying for insurance or add-on products that delivered little or no value, or that they did not properly understand at the time,” Mortlock said. He said Wallace’s case raises a broader question about the scale of the issue. “If she was paying for products she did not realise were optional, the obvious question is how many other nurses, teachers, police officers, ambos, firefighters, aged care workers, and public servants are in the same position,” he said.
A significant jurisdictional threshold passed on June 30, 2025. For complaints lodged after that date, AFCA may assess a complaint as falling outside its usual six-year time limit if the consumer purchased add-on insurance prior to July 2019, unless special circumstances apply, assessed on a case-by-case basis. For policies sold from July 2019 onward, the standard six-year timeframe runs from the date of sale.
In practice, this raises the evidentiary bar for paid representatives pursuing older complaints. When lodging complaints about pre-2019 policies after June 30, 2025, paid representatives must outline when the complainant first became aware of their loss, why the complaint was not lodged earlier, provide a direct statement from the complainant, and submit an argument addressing whether special circumstances apply.
The deadline does not, however, extinguish firms’ internal obligations. AFCA expects financial firms to engage and resolve add-on insurance complaints regardless of its jurisdictional limits, and consistent with their internal dispute resolution obligations. For firms still carrying unresolved legacy complaints, internal dispute resolution requirements remain operative even where AFCA’s external jurisdiction may not – a distinction that has direct implications for how legal, compliance, and disputes teams manage this exposure going forward.
The regulatory history behind add-on insurance follows a clear progression from post-sale remediation to preventive product design obligations, a trajectory that directly shapes the current environment for financial firms. Following ASIC’s 2019 report on CCI, which identified consistently poor product value and harmful sales practices across 11 major lenders, the regulator secured more than $160 million in remediation distributed to approximately 434,000 consumers. All lenders reviewed subsequently exited the CCI market for credit cards, personal loans, and home loans.
The structural response came through ASIC’s design and distribution obligations (DDO) regime, which took effect in October 2021, requiring product issuers and distributors to design and sell products suited to an identified target market. Enforcement has since moved from administrative stop orders to civil penalties. In January 2025, the Federal Court ordered Firstmac Limited to pay $8 million in penalties for failing to meet its DDO obligations, in ASIC’s first civil penalty action against a distributor involving DDO breaches.
In 2024-25, AFCA identified possible systemic issues in add-on insurance complaints, reporting concerns to regulators about misleading practices, breaches of advice obligations, poor complaint handling, and residual harm not addressed through earlier remediation. Nearly three-quarters of add-on insurance complaints were directed against nine AFCA members, mainly large banks.
The evidence base – rising complaint volumes concentrated among a small number of large institutions, active regulatory referrals from AFCA to other regulators, and an enforcement regime now capable of delivering eight-figure civil penalties – points to a complaint environment that carries greater consequence for firms with unresolved add-on insurance exposure than the remediation programs of 2019 and 2020 did at the time.
