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AFCA Urges Insurance Industry to Improve Premium Explanations to Reduce Disputes

AFCA Urges Insurance Industry to Improve Premium Explanations to Reduce Disputes

AFCA Urges Insurance Industry to Improve Premium Explanations to Reduce Disputes?w=400
The Australian Financial Complaints Authority (AFCA) is calling on insurers to enhance their communication regarding premium increases to help resolve disputes more effectively and fairly.
The authority suggests that offering flexible payment options could also aid in managing disputes.

The annual review from AFCA highlights a 17% increase in general insurance complaints, totaling 34,231 cases up to June 30. A significant portion of these disputes centered around premium increase explanations, which AFCA believes can be better communicated.

Improved clarity on how external cost pressures impact premium changes is key, AFCA suggests, urging financial firms to provide detailed justifications to consumers about why their insurance costs have escalated.

David Locke, CEO of AFCA, points out that sustained high levels of complaints indicate that there is considerable room for improvement within the insurance sector, particularly in addressing straightforward issues like claims delays. He emphasizes that proactive communication is critical in preventing complaint escalation.

Among the complaints, add-on insurance products such as consumer credit insurance, guaranteed asset protection, and extended warranties accounted for 23% of the grievances. Issues within these categories often stem from unfair sales practices and poor disclosure, leading to systemic problems that AFCA has flagged to regulators.

Misleading information remains the chief concern, responsible for 22% of general insurance complaints. These include issues predominantly related to add-on products, followed closely by delays in processing claims.

Comprehensive motor insurance is particularly affected by these complaints, spurred by shortages in parts and labour, marking an ongoing challenge for the industry. AFCA insists that insurers could do more to meet customer expectations through diligent and transparent communication.

AFCA is urging insurers to tackle the causes of claim delays and ensure that their communication practices allow customers clear insight into why they must wait and how long the process might take. This call to action includes an emphasis on addressing prolonged home insurance claims, which sometimes result in unnecessary cash settlements instead of completed repairs.

The authority also emphasises the importance of recognising and responding appropriately to vulnerable customers, stressing the need for insurers to remain committed to early resolution and proactive engagement.

Published:Thursday, 23rd Oct 2025
Source: Paige Estritori

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

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