When a client’s motor vehicle claim is rejected, the broker takes the call. What the Australian Financial Complaints Authority’s (AFCA) latest systemic issues report signals is that, in an increasing number of cases, those rejections are not standing up to scrutiny.
AFCA published the ninth edition of its Systemic Issues Insights Report on October 6, covering the second half of the 2025-26 financial year. It documents 104 systemic issue investigations and 63 referrals to regulators, with outcomes affecting 390,724 consumers and small businesses. Financial remediation secured during the period totalled $1.2 million.
The figures matter less than the pattern behind them.
In general insurance, AFCA found that adverse claim decisions in several cases applied policy terms too narrowly or required consumers to meet evidentiary standards the circumstances did not support.
One investigation examined motor vehicle claim assessments where AFCA found the approach created a risk of claims being declined without adequate consideration of the surrounding circumstances. The insurer was required to undertake a historical review of declined claims and rebuild its decision framework – expanding internal review of proposed denials and developing scenario-based guidance for staff.
This finding is consistent with the broader complaints picture. According to AFCA’s preliminary 2025-26 data, motor vehicle insurance was again the most complained-about insurance product, with claim rejection complaints rising 47% during the financial year.
AFCA chief customer officer Deborah Jenkins said: “There is still opportunity to reduce overall complaint volumes, with comprehensive vehicle insurance again the most complained about insurance product, and rejection of claim complaints increasing by 47% this year.”
The General Insurance Code Governance Committee’s (GICGC) Annual Industry Data and Compliance Report for 2024-25 recorded 70,325 code breaches industry-wide – a 20.5% rise on the prior year – with claims-handling failures under Part 8 of the code making up 59% of the total.
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The second finding cuts more directly to broker practice: what gets communicated – and what does not – when cover changes at renewal.
AFCA investigated a case where customers transitioning between insurance arrangements were initially told their cover had not changed. At a later renewal, material changes were made to portable contents cover, meaning certain items were no longer covered unless individually listed. AFCA found that communications did not clearly draw consumers’ attention to the reduction.
Complaints and declined claims later showed some consumers only discovered the change when they lodged a claim.
AFCA’s position is clear: providing renewal documentation is not, by itself, sufficient to ensure consumers understand a material change to their cover. Where cover is transitioned or materially altered, firms should ensure that significant adverse changes are communicated clearly enough for consumers to grasp the practical effect before a claim arises.
For brokers, this is not only a consumer protection matter. Where an insurer reduces cover at renewal without prominent disclosure and a broker forwards that renewal without flagging the change, the broker’s position becomes difficult to defend when the client’s claim is later declined on those revised terms.
That exposure is already showing up in broker-specific compliance data. According to the National Insurance Brokers Association (NIBA), citing the Insurance Brokers Code Compliance Committee (IBCCC), policy renewal breaches have consistently accounted for around half of all reported broker code breaches since 2017. In 2024 alone, brokers reported 2,442 renewal-related breaches, affecting more than 4,500 clients and resulting in more than $3.7 million in financial impact.
The draft Insurance Brokers Code of Practice – currently under consultation with a January 2027 launch targeted – proposes extending the pre-renewal client contact requirement from 14 days to 28 days, aligning it with the general insurance code review panel’s recommendation for insurers.
One feature of AFCA’s systemic issues process that brokers should track: a single complaint can open a review of all consumers in a similar position.
In the motor vehicle claims investigation, AFCA found that the same decision-making approach may have affected consumers beyond the original complainant, prompting a historical review of declined claims across the full cohort. Brokers whose clients fall within a reviewed group may find those clients contacted directly by the insurer, with no advance notice to the broker.
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AFCA recorded 119,949 total complaints in 2025-26 – the highest annual volume on record and the third consecutive year above 100,000. General insurance accounted for 36,022, up 5% on the prior year.
For brokers, complaint volumes remain comparatively contained. NIBA, citing AFCA’s 2024-25 Datacube, reports that general insurance broker complaints totalled 788 – approximately 0.8% of the total, much of it linked to historical add-on insurance matters.
That low share does not insulate brokers from the effects of insurer conduct upstream. Where claims are declined on grounds AFCA finds insufficient, or where renewal communications fall short, the broker holds the client relationship through whatever follows.
AFCA also reported 837 additional matters to regulators under the Corporations Act 2001, including two serious contraventions of the law and 835 matters involving failure to give effect to AFCA determinations.
The message running through Edition 9 is that complaints are treated as evidence of control failure – not individual disputes to resolve and close. The question for brokers is whether their renewal process and product placements hold up under that standard.
