Insurance Brokers have less complaints than direct insurers

We have shared several times the benefits of using a broker over a direct insurer. This has been supported by a recent article in NIBA (National Insurance Brokers Association) in an interview with the Lead OmbudsmanInsurance at the Australian Financial Complaints Authority (AFCA), Emma Curtis. AFCA released a report recently that brokers make up less than 1% of all complaints.

Insurance brokers are playing a key role in helping customers understand their policies and advocate for them through the claims handling process.

Curtis stated, “What we offer brokers, apart from fair and independent dispute resolution, is the opportunity to delve into the decisions that come out of our general insurance work and to use insights from those decisions to help them help their customers. We publish our determinations on our website so they’re readily accessible.”

Curtis added that disputes about brokers form a very small proportion of the complaints AFCA receives every year, “About 1 percent of the 70,000 complaints we received last year overall financial services and products. A large proportion of broker complaints were resolved in the early, more informal stages of our dispute resolution process, and we applaud brokers for their part in that.”

Out of interest, the four most complained about products in broker disputes this year have been motor vehicle comprehensive insurance, home building, commercial property, and consumer credit insurance, and the most common issues were denial of the claim, delay in claim handling, service quality and claim amount.”

The latest version of the AFCA Datacube outlines complaints data from 1 July 2020 – 30 June 2021 and the statistics support Curtis’s statements. AFCA received 67,613 complaints across all jurisdictions in the current period, of these 310 complaints related to general insurance brokers, an increase on the previous year however less than half a percent of all complaints.

Despite an increase, broker complaints still accounted for less than half a percent of all complaints received by AFCA.

One such complaint against a direct insurer is against Insurance Australia Limited. The Australian Securities & Investments Commission (ASIC) has launched Federal Court civil penalty proceedings against Insurance Australia Limited over NRMA Insurance premiums.

The regulator is accusing Insurance Australia Limited of having engaged in misleading or deceptive conduct and making false or misleading representations to certain customers of NRMA Insurance by supposedly saying that they were eligible for home and motor insurance renewal discounts that, according to ASIC, were not applied.

It is ASIC’s allegation that gross insurance premiums were raised so that ‘discounted’ net premiums did not fall below a certain level – essentially not passing on the full discounts to policyholders.

Rivers Insurance prides itself on addressing issues in a fair and honest manner. It follows The Insurance Code of Practice which requires our members to be open, fair, and honest in dealings with customers and commits insurers to high standards of service when selling insurance, dealing with claims, responding to disasters, and handling complaints.

The Insurance Council of Australia is the representative body for the general insurance industry of Australia.