Insurers Must Step Up Regarding Complaints Handling, Notes ASIC

Insurers are on notice to improve their customer complaints handling process following the findings of a complaints handling report released by ASIC

Insurers are on notice to improve their customer complaints handling process following the findings of a complaints handling report released by Australian Securities and Investment Commission (ASIC). 

The industry-wide ASIC report stated there were over 4.7 million complaints reported by financial firms of all types, and general insurance products were subject to the most complaints, accounting for 33 per cent of the total from 1 July 2023 to 30 June 2024. 

The report highlighted that insurers are failing to identify one in six customer complaints, therefore preventing escalation to the Internal Dispute Resolution (IDR) regime, and are not identifying systematic issues that involved multiple customers. 

ASIC Commissioner Alan Kirkland said: “Proactively identifying and addressing systemic issues is critical to preventing other consumers from experiencing the same problems. It also reduces downstream remediation and business costs, benefiting both insurers and their customers.” 

The ASIC report is on the back of data on general insurance complaints made to the Australian Financial Complaints Authority (AFCA) that showed an increase of 50 per cent in the 2022-23 financial year, and rose again in 2023-24. 

Commissioner Kirkland noted that the issues highlighted in ASIC’s review were disappointing, particularly as insurers were told to improve their IDR practices following an ASIC review of claims handling in the aftermath of the 2022 Queensland and New South Wales floods. 

“It’s time for insurers to step up and do what they should have done three years ago when these obligations commenced,” Commissioner Kirkland said. “Insurers should prioritise building a positive complaints management culture that values and learns from customer complaints and prevents problems from recurring.”  

ASIC stated it expects all insurers to act on the report’s findings and take steps to uplift their approach to complaints handling. Insurers in the review will also be asked to prepare an action plan to explain how they will address these issues and better support their customers. 

You can read ASIC’s full report here.