Rejection of claim complaints for comprehensive vehicle insurance rose 47% in 2025-26, superannuation insurance claim rejection complaints climbed 82%, and the industry’s own compliance body recorded 70,325 code breaches in the prior year – a 20.5% increase, with claims-related failures comprising 59% of that total. Together, the data presents a picture of systemic strain at the point most consequential to policyholders and their brokers.
The Australian Financial Complaints Authority (AFCA) recorded 119,949 total complaints for the year, the highest on record and the third consecutive year above 100,000. General insurance accounted for 36,022 – a 5% rise on 2024-25, when the category recorded 34,231 complaints, a 17% increase driven largely by add-on insurance and motor vehicle claim delays, with comprehensive motor vehicle insurance remaining the most complained-about product. Delay in claim handling, service quality, and claim rejection were the top three issues across all financial products in 2025-26.
The AFCA complaint figures represent disputes that have already exhausted internal resolution. The General Insurance Code Governance Committee’s (GICGC) Annual Industry Data and Compliance Report for 2024-25 shows the problem is broader still. The GICGC recorded 70,325 code breaches across the industry – a 20.5% rise on the 58,385 logged the prior year – with claims-related failures under Part 8 of the Code comprising 59% of that total, or 41,140 breaches.
The requirement to give policyholders a progress update at least every 20 business days was breached 18,350 times, up 67% from 10,989 the year before. The obligation to advise customers of a claims decision within 10 business days of receiving all relevant information resulted in 11,180 breaches. However, only 19 insurers were able to report by how much they exceeded the required claims handling timeframes. Those insurers accounted for just 41% of all claims handling timeframe breaches, meaning the duration of the remaining 59% of breaches was not reported, highlighting gaps in insurers’ ability to monitor and measure compliance with key Code obligations. The GICGC oversaw $2.9 million in remediation payments to 13,528 customers and imposed sanctions on two insurers for systemic issues in claims and complaints handling during 2024-25.
The Australian Securities and Investments Commission (ASIC) named insurance complaints and claims handling as one of its new enforcement priorities for 2026. The posture behind that designation was articulated by ASIC commissioner Alan Kirkland at the Insurance Council of Australia’s (ICA) Annual Conference in October 2025. “The insurance industry has an enormous task ahead to rebuild trust with the Australian community following a challenging period of claims handling failures. The development of a new General Insurance Code of Practice that will be enforceable by contract is an important step towards rebuilding trust. However, unless the provisions themselves improve overall levels of consumer protection, it will be a step backwards,” Kirkland said.
ICA chief executive Andrew Hall has described the redrafted Code as a trust and compliance imperative: “For the first time, insurers’ key commitments under the Code will be legally enforceable, claims left undecided after 12 months will be automatically accepted, and new vulnerability protections provide greater support for customers who need it most.” The redrafted Code – which draws on the ICA’s Industry Action Plan released in March 2025 – also introduces automatic claim acceptance for home and motor claims unresolved after 12 months, pending ASIC approval, and a new Extra Care framework for vulnerable customers.
The commercial logic for professional broker representation sharpens in direct proportion to the claim rejection rate. The National Insurance Brokers Association’s (NIBA) February 2026 consumer research report, Complexity to Clarity: The Broker Advantage, found 95% of clients view brokers as critical to claims resolution and 98% report their claims have been successfully resolved. AFCA’s 2024-25 Datacube showed broker-related general insurance complaints totalled 788 – approximately 0.8% of all complaints. While that figure rose from 447 the prior year, the increase was largely linked to historic add-on insurance matters at a single firm.
Banking and finance remained AFCA’s largest category at 66,971 complaints, up 23%, with financial difficulty complaints rising 17% and credit reporting complaints up 22%. Investments and advice complaints rose 56% to 6,542, primarily driven by the Shield Master Fund and First Guardian collapses, with complaints alleging failure to act in a client’s best interest up 65% to 2,081.
AFCA chief customer officer Deborah Jenkins (pictured) attributed the sustained volumes to macroeconomic conditions. “These numbers highlight the impact that ongoing cost-of-living challenges and economic uncertainty are having on consumers, and the flow-on effects these conditions can have across the financial system. Complaint data is one of the clearest signals firms have about what’s going wrong for their customers. Firms that use those insights to improve are more likely to prevent the same problems happening again,” Jenkins said.
Since commencing operations in 2018, AFCA has handled approximately 690,000 complaints and secured $2.6 billion in compensation or refunds. Its systemic issues work has delivered more than $398 million to over 6 million people. The full Annual Review is expected later in 2026, with preliminary figures subject to revision.
