AFCA releases 2022-23 Annual Review
AFCA has published its 2022-23 Annual Review. It includes expanded and segmented data on banking and finance, insurance, investments and advice, and superannuation, along with a range of other topics, including scams.
In July, AFCA had reported that it received 96,987 complaints from consumers and small businesses in 2022-23, which was a record and 34% more than the year before. 86,185 complaints were closed, up by 21% from the previous year. At 53,638 banking and financial services were the sector with the most complaints, followed by general insurance.
Significant increase in general insurance complaints
This year, AFCA received 27,924 general insurance complaints, which is a 50% increase on last year. It closed 25,570 complaints in total, an increase on last year’s 17,244 cases. In 2022–23, 45%, or 11,565 complaints, were closed at the Registration and Referral stage. On average, it took 85 days to close a complaint.
The highest number of general insurance complaints by product were home building insurance at 9,592, or 34%, comprehensive motor vehicle insurance with 8,296 complaints, or 30% of the total, and consumer credit insurance at 7%, or 1,951. Travel insurance complaints were slightly lower at 6%, or 1,679 complaints. Home contents insurance complaints made up 6%, or 1,565 complaints.
The top three issues complained about were claim handling delays (7,953 or 28%) – this was a 66% increase over 2021–22. Next were claim amount complaints (5,720 or 20%) – a 53% increase over last year. Denials of claims due to exclusions or conditions made up 17%, or 4,733 of the total complaints for the year.
Of the total of 25,570 general insurance complaints, at the Registration and Referral stage 11,565 (45%) were closed. This stage has averaged 8,627 complaints over the past five years. AFCA closed 7,297 (29%) complaints at the Case Management stage or 29%. This was an 83% increase over last year. The Rules Review stage closed 1,708 (7%) complaints. The Preliminary Assessment stage closed 2,456 (10%) complaints and the final Decision stage closed 2,544 (10%) complaints.
Trends when looking at general insurance complaints
This year, there was a marked increase in general insurance complaints. There was a notable increase in complaints about insurers’ services, along with a general increase in other areas such as claim denials. Interestingly, these high complaint volumes weren’t primarily linked to claims from severe weather events and natural disasters like floods, but they stemmed from ‘business as usual’ claims. This is likely due to a range of issues, including the industry shifting resources to handle the surge of claims from significant weather events, leading to further delays. Issues with supply chains affected by international events also led to delays in claims handling. These delays resulted in increased complaints about insurers’ services, primarily driven by ineffective communication with policy holders.
In 2022–23, according to AFCA, there was a notable decline in performance by industry to address and resolve complaints before they reached AFCA, or in the early stages of the AFCA process. Insurers were also less responsive in their interactions with AFCA, as reflected in the rise of overdue responses, extension requests and non-responses to AFCA.
AFCA acknowledges there has been a range of environmental factors that have created challenges for the sector. However, we have seen a sustained level of complaints that have continued now for more than 12 months, and which do not look to be slowing.
Natural disaster ‘significant event’ complaints
Over this financial year, AFCA responded swiftly to four significant events to help those in need. These included the following storm and flood events that affected:
NSW in July 2022
Victoria, NSW and Tasmania in October 2022
Central West NSW in November 2022.
AFCA was also prepared to respond to the Newcastle hailstorm in May 2023. However, as at 30 June 2023, it had not received a complaint.
AFCA kept oversight on the complaints resulting from the severe weather and flooding in South East Queensland and NSW in February 2022, which had been declared a ‘significant event’ by the ICA.
Most complaints arising from the NSW storms and floods in July 2022, were about the denial of a claim due to an exclusion or condition (85 or 42%). For this event, AFCA received 201 complaints and resolved 146. Only one related to financial difficulty.
AFCA received 211 complaints arising from the storms and floods affecting Victoria, New South Wales and Tasmania in October 2022, and resolved 123. Only one related to financial hardship. The main issue raised was the denial of claims due to an exclusion or condition (70 or 33%).
AFCA received 2,468 complaints and resolved 1,997 following the severe weather and flooding event that struck South East Queensland and NSW in February 2022. Only 18 complaints related to financial hardship. Delay in claim handling and the denial of a claim due to an exclusion or condition accounted for 858 (35%) and 821 (33%), respectively.
You can read the full AFCA 2022-23 Annual Review at AFCA’s website.