The Insurance & Financial Services Ombudsman Scheme is advising people who use AI tools to get help with making complaints to double check the information as some advice can be wrong or misleading, citing incidences of AI tools suggesting insurance claim decisions are “frequently overturned”, hallucinating previous cases, and of the Scheme seeing complaints that are 300 pages long.
Ombudsman Karen Stevens says it’s understandable people turn to AI tools to make complaints, especially when they’re trying to navigate complex or stressful situations.
However, she warns that AI‑generated responses and advice can give incorrect information about likely complaint outcomes and hallucinate previous cases.
The IFSO Scheme says that in one example it has seen, a Google AI summary suggested that insurance claim decisions are “frequently overturned” when consumers complain, and that “up to 80–90% of cases can result in success if people persist”.
Stevens says that those kinds of claims are misleading.
She says while many complaints are resolved quickly and directly by insurers, sometimes just by a simple explanation, complaints which escalate are often complex and stressful, and not always able to be resolved in the consumer’s favour.
““Many people come to us hoping we can put things right, but unfortunately if the law or the contract doesn’t support their position, we can’t change that – even when the outcome feels unfair.”
Stevens says AI responses can make the process more frustrating for people when reality doesn’t match their expectations.
…it can sometimes oversimplify complex policy wording, miss key exclusions, and rely on overseas information that doesn’t apply in New Zealand…
“While AI can be very useful for general information, it can sometimes oversimplify complex policy wording, miss key exclusions, and rely on overseas information that doesn’t apply in New Zealand. We’ve also seen instances of AI hallucinating previous cases and using them as examples. This can result in it giving incorrect advice,” she says.
Stevens says that many consumers are using AI to draft their complaints, which can be useful, particularly for those facing language barriers. However, this can sometimes lead to confusion about what the heart of the issue is for the consumer.
“We’ve seen complaints which are 300 pages long. But more words aren’t necessarily better. Clear information about what has gone wrong for someone is much more useful than multiple pages referencing legislation and case law,” she says.
…consumers should also be wary of the risk in putting personal or confidential information into some AI tools…
Stevens says consumers should also be wary of the risk in putting personal or confidential information into some AI tools, as that information may be stored or reused in ways consumers don’t expect.
She advises those using AI tools to help them make a complaint to:
- Read your full policy or contract and ask your provider how it applies to your situation first
- Double check any AI-generated information and advice against trusted, New Zealand-based sources
- Be cautious about putting personal information into AI tools, particularly free ones
- If you get AI to write your complaint for you, check that it has clearly and simply communicated what has gone wrong for you
“AI can be very useful, but it’s important to use it with caution,” she says.