Insurance Disputes Hit Record Levels, Health Insurance Largest Category

The Insurance & Financial Services Ombudsman Scheme has released its annual figures showing record demand for its services, with health insurance becoming the single largest product category of disputes investigated for the first time.

The IFSO Scheme says health insurance disputes increased by 91% during the year ended 30 June 2026, overtaking both house and motor vehicle insurance.

IFSO told Riskinfo there had been 170 health insurance disputes and also pointed to:

• 42 life insurance disputes
• 32 disputes regarding income protection insurance
• 24 disputes regarding trauma insurance

There were eight financial advice disputes accepted this year compared with four the previous year.

Insurance & Financial Services Ombudsman, Karen Stevens says in a statement that rising healthcare costs and increasing pressure on the health system are probably contributing to the high number of health insurance disputes.

“Many of the disputes we considered involved disagreements about policy exclusions, benefit eligibility, limits, or changes to policy terms. Consumers generally do not realise how those factors affect their cover until they need to make a claim,” she says.

In total, the IFSO Scheme handled 3,977 cases during the year ended 30 June 2026, including 2,602 complaints.

It says it concluded 833 dispute investigations, the highest number in its history, and an increase of 46% compared with the previous year. Dispute volumes have increased almost 190% over the past five years from 2022 to 2026.

…Ongoing financial pressure on households is probably driving demand for dispute resolution…

Stevens says that ongoing financial pressure on households is probably driving demand for dispute resolution. “While there have been no recent major natural disasters driving complaint volumes, we continue to see record levels of disputes coming to the IFSO Scheme.”

More than 92% of disputes accepted by the IFSO Scheme were insurance related.

“Consumers are experiencing financial pressures, which can make the outcome of an insurance decision even more important. We are also seeing growing use of AI tools to make complaints, which have had an impact on the volumes we’re receiving.”

…Scope of cover and policy exclusions were the most common issues in disputes investigated…

Stevens says that questions about what insurance policies do, and don’t, cover remain at the heart of many disputes. Scope of cover and policy exclusions were the most common issues in disputes investigated by the Scheme.

“This year we have been reinforcing to consumers that there are some things we can help with, and some things we can’t. Because we can’t change the law or rewrite their contracts, we often cannot give consumers the outcome they’re hoping for. If no cover exists under the policy they took out, we can’t change that.”

Stevens says that when the IFSO Scheme cannot deliver the outcome a consumer is seeking, it can still provide an independent review and clear explanation of whether an insurer or financial service provider has acted in line with its obligations.

Despite the record demand for the Scheme’s services, disputes were investigated and completed in an average of 46 days. The Scheme recorded payments to consumers totalling more than $1.39 million during the year.

“The IFSO Scheme exists to provide a free, fair and independent service for the customers of financial service providers. As complaint volumes continue to grow, our focus remains on ensuring consumers can access independent dispute resolution, and that financial service providers can learn from complaints to improve outcomes for their customers,” she says.