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Claim denial ‘most common’ risk insurance complaint

The rejection of a claim was the most common consumer complaint relating to risk insurance during the 2014-15 financial year, the Financial Ombudsman Service’s (FOS') annual review has revealed.

According to FOS' Australia Annual Review report – which covers the service's activity during the 2014-15 financial year – the organisation accepted 1,227 life insurance dispute items, up six per cent on the previous year.

Based on the disputes FOS received, the organisation said the “most common” reason (32 per cent) consumers made a complaint was due to the denial of a claim.

FOS said the rejection of a claim was also the most common reason for disputes in “income stream risk” products.

Throughout the year, FOS reported that it accepted 677 disputes relating to “income stream risk” products and of those disputes, 552 or 82 per cent involved income protection insurance.

“Most disputes we accepted about income stream risk products were in relation to a financial services provider’s (FSP) decision,” FOS’ report said.


“Of these, an FSP decision to deny a claim remains a prevalent complaint for income protection insurance.

“Within these disputes, the applicants complained that the FSP was not willing to accept information provided in support of claims without corroborating evidence,” the report said.

FOS also reported that complaints about claim amounts and incorrect premiums coupled with disputes over denial of claims were key themes associated with income protection insurance.

“Of continuing concern is the failure of FSPs to use correct policy provisions and to rely on more recent versions with less beneficial terms,” the report said.

“Given that life insurers are the main suppliers of these products, it is not surprising that most common income stream risk product disputes (68 per cent) involved life insurers.”

FOS reported that for the 12-month period it had received a total of 31,895 disputes, which was up by one per cent on the previous year.

Claim denial ‘most common’ risk insurance complaint
Denial - rejected - insurance claim
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