The Australian Financial Complaints Authority’s (AFCA’s) update last month showed that misleading product information, claims delays and payout amounts are the top issues for insureds concerning coverages.
Until recently and for several years prior, claims delays stood out from the pack of complaints. The January update suggested that the complaints picture has become more complex as the 10% year-on-year increase in general insurance complaints continues.
In recent interviews with Insurance Business, brokers have reported a similar cluster of issues with insurers, particularly in the claims area.
During October’s National Insurance Brokers (NIBA) Convention in Adelaide, IB spoke with Perth-based Brett Piggott (main picture, left) and Alex Rowland (main picture, right), executive directors of Willis Temby Insurance Brokers.
IB asked what they see as their biggest current insurance challenge?
“Currently, there is a gap between the level of service our clients expect and what they are receiving,” said Piggott. “It is essential to bridge this gap by ensuring timely service delivery and adherence to the agreed-upon terms and conditions of each contract."
In other words, claims delays are part of a wider service issue. Rowland agreed.
“As brokers, we strive to do the best job possible but, from a claims perspective, challenges often arise in obtaining fair adjudication, accurate interpretation and proper application of policy coverage and wording,” he said. “Ensuring that insurers thoroughly assess claims, make determinations, and promptly pay out settlements can sometimes be a problem.”
Piggott said delays from insurers are currently “the most frustrating part.”
“There seems to be little regard for the value of time or the impact of any delays,” he said. “While we can manage the delays by communicating with our clients and reassuring them that we're all working on a solution, the reality is that they've paid for their policy and rightfully expect it to respond promptly.”
Piggott said artificial intelligence (AI) could help solve some of these issues but “it's crucial” insurers allocate sufficient human resources.
"One of the challenges we're encountering with insurers and suppliers is their ability to fulfill the commitments they've made,” he said. “In some cases, they're falling short simply due to inadequate resourcing,” he said.
“As brokers, we must be accountable to our clients,” said Piggott. “If we commit to providing a service, we need to ensure we can deliver it effectively, which requires proper resourcing."
Matthew Bates (pictured immediately below), managing director of Bell Partners Insurance, told IB that issues around claims handling are an ongoing problem.
“It’s a challenge as an industry - we need to improve claims handling support significantly across the whole industry,” said Sydney-based Bates.
In an interview late last year, he said claim amounts and denials can be points of friction with insurers and clients.
“From a broking perspective, we should be aware that they are among the top things that clients are complaining about [in AFCA reports],” said Bates.
He said that means brokers should ask themselves what steps they are taking to keep clients informed.
“In relation to claims, it's managing expectations and keeping your clients informed while being a little bit of the squeaky wheel in pushing a claim forward with our insurer partners,” said Bates. “I think as brokers, we have that obligation.”
The broker said he thinks the industry is slowly improving the way it deals with claims.
“It has improved but it’s been a bit like turning an ocean liner in the sea,” said Bates. “It has not been a quick, easy fix and I could still pick on a couple of insurer partners that haven't picked up their game or have been a lot slower than others.”
According to AFCA’s complaints update, in December there were 2,160 insurance related complaints. Motor vehicle comprehensive complaints made up more than one third of this number, many likely directly sold coverages.
The regulator said, across financial services that month, it received 6,770 complaints, down 4% from December 2023.
In FY25 to date, AFCA has reported receiving more than 46,000 complaints, down 10% on the same period for the year prior.
Are you a broker? What do you see as the top issues facing insurers? Please tell us below.
