More than 100,000 complaints were lodged with the Australian Financial Complaints Authority in the last financial year, with just 2.4% relating to life insurance.
During the year, AFCA reported that Australian clients were paid more than AU$391m in compensation with complaints spread across the following categories:
- Banking and finance: 57,581
- General insurance: 31,432
- Superannuation: 6,152
- Investment advice: 4,137
- Life insurance: 2,441
According to AFCA’s annual review, the authority closed 2,441 life insurance complaints in 2024-25. More than 1,000 of these were linked to Aboriginal Community Benefit Fund entities.
AFCA noted that while life insurance complaints make up a relatively small proportion of its overall caseload, their complexity increases their significance.
“Complainants are usually suffering an illness or injury, or struggling to understand policy terms or a claims denial decision by the insurer. This is particularly the case with income protection claims, which can be very stressful if those benefit payments are needed to meet living expenses,” the report states.
Denial-of-claim disputes remained the largest life insurance issue in Australia, rising 40% on 2023-24 to 243. Income protection complaints eased slightly to 530 (from 540 the previous year), while TPD complaints rose 43% to 321.
The review also showed that 2,461 complaints were lodged by Aboriginal and Torres Strait Islander consumers during the year, down from 3,158 in 2023-24.
…the complaints figures likely understate the scale of the problem…
AFCA said the data highlights ongoing barriers faced by First Nations consumers in accessing financial services, particularly in regional and remote communities.
AFCA Deputy Chief Ombudsman Dr June Smith said the complaints figures likely understate the scale of the problem, as many First Nations consumers disengage before reaching external dispute resolution due to frustration with firms’ processes.
The Australian authority also raised concerns that automated customer service and internal dispute resolution systems may fail to identify vulnerability, hardship, cultural or language barriers, or financial abuse.
AFCA has 50,299 members, with complaints made against 4% of members (2,011) during the year. Complaints took an average of 79 days for AFCA to resolve.