Average life insurance complaint handling time almost doubles

The average time the Australian Financial Complaints Authority (AFCA) takes to close a life insurance complaint has gone up by 59 days in the last two years.

The average time taken to close a complaint in the 2019 financial year was 69 days, while in 2020 it was 121 and in 2021 it had risen to 128.

In the last two financial years, 45% of complaints were closed between 61 to 180 days while in 2019 about 32% had their complaints closed between 61 to 180 days.

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However, since last financial year, the overall number of complaints received in the area of life insurance reduced by 12% – going from 1778 to 1623.

Life insurance complaints made up 2% of total complaints received by APRA.

The top five life insurance complaints received by product were income protection (575), term life (290), total and permanent disability (184), funeral plans (169) and trauma (115).

AFCA closed 1,595 life insurance complaints last financial year – almost 7% less than the financial year before. At the registration stage, 513 were closed while 473 were closed at the case management stage, 104 at the rules review stage, 225 at the preliminary assessment stage and 280 at the decision stage.

Speaking at the AFCA Member Forum, Emma Curtis, AFCA lead ombudsman – insurance, said registration was the best place for a case to be closed in terms of time, efficiency, cost and good customer outcomes.

AFCA would be monitoring the resolution rate at registration in the coming months, given recent changes to RG 271.

“Complaints about calculation of income protection benefits were a third of all life insurance complaints and these were closed within 60 days on average,” Curtis said.

“The most common issues complained about were incorrect premiums, denial of claims delays and claims handling service quality and misleading product or service information.

“Complaints about incorrect premiums were commonly about the rate at which stepped premiums increase over time. These complaints are often exacerbated by firms not clearly explaining how stepped premium curves will affect future premium rates.

“We encourage firms to provide clear and effective premium rate tables or premium projections to customers at the point of sale or an annual notices to help reduce bill shock and the number of premium disputes.”

Around a third of life insurance complaints (575 complaints) were about income protection policies.

In its annual review, AFCA said it “understands the difficulties presented by complainants’ corporate and trust structures, and the complexities of business accounting”.

This week AFCA launched a digital platform to help financial firms better manage disputes that reach the ombudsman service.

The Member Benchmarking Dashboard was an interactive platform for financial firms that provided near real-time complaints data - updated daily - and gave individual firms more information about their complaints, including how quickly they were being resolved. 

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