Complaints against insurance companies

Dispute resolution schemes

There are two main dispute resolution schemes that can help people in disputes with their insurance companies:

Insurance Ombudsman Service for complaints against general insurance companies
Financial Industry Complaints Service for complaints against life insurance companies and their agents.

Advantages of dispute resolution schemes

The advantages of using these schemes rather than going to court are:

they are familiar with insurance law
they are free
you do not need a lawyer to use them
they will help investigate the complaint

Complaints against brokers

For complaints against insurance brokers the Insurance Brokers Disputes Limited is the relevant scheme to deal with disputes (see Complaints about brokers).

The complaints process

Before going to either the Insurance Ombudsman Service or the Financial Industry Complaints Service you must attempt to resolve the complaint with your insurer directly.

The internal review by the insurer is not window dressing. If a complaint is taken to one of the schemes the insurer will have to pay a fee, so it has an economic incentive to establish proper internal complaint resolution procedures.

If the matter cannot be resolved with the insurer it may be taken to the relevant scheme, which will conduct an investigation.

If the complaint is not settled or conciliated at this stage, it is referred to a panel of the relevant scheme.

What the panel will consider

The terms of reference of the schemes require the panel to give consideration to 'what is fair and reasonable in all the circumstances, to good insurance practice, the terms of the policy and established legal principle'.

It may therefore be possible to argue that a claim should be paid because the conduct of the insurer was unreasonable or unfair, even if it was legal.

Making a submission to the panel

The following points should be addressed in a submission to the panel of one of the dispute resolution schemes:

The letter of complaint should clearly state why the claim should be paid. It should specifically address any reasons the insurance company has given for refusing the claim or rejecting the complaint.
If the claim depends on what was said between the consumer and the insurer, the conversations should be reported as precisely as possible. Any supporting details should also be provided, such as information that would make it more likely that the consumer should be believed (for example, the person relied on oral statements because they could not read English).
If it is being argued that the person did not receive various documents (and that, for example, the insurer should pay because it breached s.35 of the Insurance Contracts Act), the history of the sale of the policy should be set out in detail, identifying what documents were received.

The panel's decision

The decisions of the schemes are not binding precedent. Each case is considered individually on its facts.

The panel's decisions are not binding on consumers either - a person who is dissatisfied can reject the decision and pursue court action.