2020–21 Annual Review

General insurance complaints

Between 1 July 2020 and 30 June 2021

Complaints received

16,912 complaints received

47% resolved at Registration and Referral stage

Top five general insurance complaints received by product 1
Product Total
Motor vehicle – comprehensive 4,386
Home building 3,527
Travel 2,477
Home contents 1,079
Motor vehicle – uninsured third party 934
Top five general insurance complaints received by issue 2
Issue Total
Claim amount 3,161
Denial of claim – exclusion/condition 3,146
Delay in claim handling 3,126
Denial of claim 2,479
Service quality 1,164
Complaints closed

17,841 complaints closed 3

Average time to close a complaint 87 days

Stage at which general insurance complaints closed
Stage Total
At Registration 8,367
At Case Management 4,330
At Rules Review 1,350
Preliminary Assessment 1,669
Decision 2,125
Average time taken to close general insurance complaints
Time Total
Closed 0–30 days 21%
Closed 31–60 days 30%
Closed 61–180 days 38%
Closed 181–365 days 10%
Closed greater than 365 days 1%


AFCA can consider complaints about the following general insurance products:

  • consumer credit insurance
  • home building
  • home contents
  • motor vehicle
  • personal and domestic property (including pleasure crafts)
  • residential strata title
  • sickness and accident
  • travel insurance
  • business interruption.

The types of issues and problems AFCA resolves include:

  • decisions a financial firm has made, such as denial of an insurance claim
  • insurance premiums that were incorrectly applied or calculated
  • information that wasn’t disclosed about a product, or was misleading or incorrect
  • if a complainant gave instructions and they weren’t followed
  • privacy and confidentiality breaches
  • disputes over liability for a car accident or insurance excess
  • denial of a travel insurance claim because of a pre-existing condition.

During the 2020–21 financial year, a total of 16,912 general insurance complaints were received by AFCA. This made up 24% of the total complaints received.

AFCA closed 17,841 general insurance complaints.

AFCA was pleased to see industry resolve many complaints early, with 8,367 complaints being closed at Registration and Referral.

There were 4,330 complaints closed at Case Management, with only 2,125 progressing though to the final Decision stage.

The average time taken to close these complaints was 87 days. The majority (64%) of complaints were closed within 90 days.

General insurers received the highest number of general insurance complaints (13,732), followed by complaints against underwriting agencies (2,100).

Most complaints received were about the claim amount (3,161), denial of claim – exclusion/condition (3,146), delay in claim handling (3,126).

AFCA once again received a number of complaints as a result of the COVID-19 pandemic (2,636), with travel insurance and business interruption insurance being the most common type of complaint. AFCA was involved in two business interruption test cases in 2020–21, which you can read about here.

AFCA has been active in its engagement with both industry and consumer groups in tackling some important emerging issues in insurance. We continue to partner with the Insurance Council of Australia, industry and consumer groups in responding to the impact of natural disasters and the COVID-19 global pandemic.

For more information about AFCA’s response to the COVID-19 pandemic, see Significant events.

AFCA and test cases

Under the AFCA Rules, a financial firm must obtain AFCA’s agreement to have a complaint treated as a test case.

AFCA cannot initiate a test case. One of the factors AFCA will consider before agreeing to allow a financial firm to treat a complaint as a test case is whether there are important issues of law to be decided.

The financial firm must meet AFCA’s requirements, and must undertake to pay the complainant’s legal costs incurred in the test case, including the costs of any appeal of the first decision.

AFCA does not provide any financial or legal support, or other resources for the running of a test case.

Once AFCA agrees to a test case, AFCA does not have any direct involvement in the running of the test case or any appeals. AFCA agreed to allow general insurers to commence two test cases involving the interpretation of business interruption insurance policies, which were the subject of disputes by small business owners before AFCA.

Test case 1: Business interruption insurance and the Quarantine Act

In October 2020, general insurers commenced a test case that was heard by the NSW Court of Appeal. The case considered the application of a common policy exclusion that referred to the repealed Quarantine Act 1908 (Cth).

The test case sought a decision from the court on whether a reference to a quarantinable disease under the Quarantine Act 1908, in business interruption cover policies issued to small businesses, should be construed as a reference to a listed human disease under the Biosecurity Act 2015 (Cth). COVID-19 events could be excluded from the insurance cover held if the Quarantine Act 1908 applied.

On 18 November 2020, the Court found that policy references to the repealed Quarantine Act did not operate to exclude the two claims in the test case.

The insurers that were parties to the test case applied for special leave from the High Court of Australia to appeal the decision. On 25 June 2021, the High Court denied the application for special leave to appeal.

The outcome of this case means that insurers can’t rely on references to the Quarantine Act to exclude business interruption claims arising from the impact of COVID-19.

Test case 2: Business interruption insurance – other policy terms

AFCA received a request from several insurers to agree to a second test case seeking guidance on the application of a range of common business interruption cover clauses to the COVID-19 pandemic. Insurers lodged proceedings in the Federal Court on 24 February 2021.

The aim of second test case is to provide guidance on common ‘trigger’ clauses, including those that relate to the effect of government orders restricting access on small business operations and the proximity of a disease outbreak to a small business.

The second test case is expected to conclude by the end of 2021.

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Case study

The complainants were part-way through an overseas trip and were forced to abandon it in March 2020, due to COVID-19. They sought refunds from two online travel agents for their prepaid trip expenses, with no success. The complainants were consistently informed that the recovery of the funds from the airline was pending. They then lodged a claim for these unused travel costs from their travel insurer.

The insurer denied the claim and the complainants brought the matter to AFCA. The insurer later agreed to pay the claim, subject to receiving adequate proof of the complainants’ loss.

The complainants also said that the handling of the claim by the insurer was poor.

Outcome and findings

AFCA found in favour of the complainants. AFCA determined that it was fair for the insurer to refund the unused travel costs to the complainants because there was:

  • no dispute as to the loss
  • no promise of payment or offer of a travel credit from the travel agent
  • no reasonable likelihood of recovery 14 months after the loss was incurred.

The AFCA determination was that the insurer must refund the complainants’ loss of $3,135.41, and pay compensation of $1,000 for non-financial loss. AFCA found that the insurer could ask the complainants to agree to provide any refund received from the travel providers to the insurer, and to agree that the insurer could assume the complainants’ rights to seek a refund from the travel provider. The insurer could require the complainants to sign a document to put this into effect.

The insurer should have paid the claim from the outset, even if it were possible that the complainants could have been reimbursed by the travel agent eventually. By the time the matter came to AFCA it was 14 months from the date of loss and the fair outcome was for the insurer to pay the claim, rather than have the complainants wait indefinitely. The insurer had the ability to then pursue recovery of the costs from the travel provider.

Case studies are used to demonstrate AFCA’s approach to an issue and have been simplified for length and clarity.

Case study

Due to the COVID-19 pandemic, a landlord’s tenants were unable to pay the rent. The landlord agreed to a reduced rental amount.

The landlord held landlord contents insurance with additional cover for ‘Loss of rent – tenant default’. The landlord lodged a claim for the loss of rent under the landlord policy.

The insurer said that given the landlord and tenants came to a negotiated agreement, the tenants did not breach the rental agreement and a claim for loss of rent could not be made.

The complainant disputed this and said they complied with the state and federal government directives to negotiate rental agreements for affected tenants and acted in good faith to mitigate their loss.

Outcome and findings

The complainant’s policy was a landlord contents policy. It included additional cover for ‘loss of rent – tenant default’. A claim for tenant default could be made independently of a claim for loss or damage to contents caused by one of the listed insured events.

The policy only provided cover when the tenant stopped paying the weekly rental amount during the term of the written rental agreement, or periodic rental agreement, but does not leave.

In this instance, while the parties varied the rental amount due to the financial impact of the COVID-19 restrictions, the tenants were not released from their financial obligations and the rental agreement was not terminated. Rather, the parties agreed to reduce the rent payable in accordance with the terms of the original rental agreement, and the tenant met the agreed obligations until the end of the lease.

The intent of the policy was to cover default in specific circumstances, none of which were applicable in this instance.

While AFCA appreciated the complainant’s situation, we found it was not fair for the insurer to pay a claim that did not meet the clear and unambiguous circumstances prescribed in the policy.

Case studies are used to demonstrate AFCA’s approach to an issue and have been simplified for length and clarity.

1 One complaint can have multiple products.

2 One complaint can have multiple issues.

2 This includes 4,898 complaints received before 1 July 2020, and 12,943 received from 1 July 2020 to 30 June 2021.

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