Insurance industry follows bankers in revealing complaint numbers
Insurers have for the first time publicised the number of complaints they receive – 11,000 in the same year that they paid out 1.2 million claims.
The 2022 numbers are all reported by insurers including IAG, which owns the State, NZI and AMI brands, and Suncorp, which owns Vero and has a majority stake in AA Insurance.
The Insurance Council Te Kahua Inihua o Aotearoa has followed the banking industry in publicising complaints data in a bid to build trust in the general insurance sector. But it’s not gone as far as to provide a breakdown of the reasons people laid their complaints, though like the banking industry it does name the most complained about insurers.
There is also no detail about the the small number of serious breaches of its voluntary Fair Insurance Code under which insurers promise to treat policyholders “honestly and fairly”, but which will be obsolete when the Fair Conduct of Financial Institutions comes into force next year.
The Banking Ombudsman began publishing complaints data in 2021, including the things people were complaining about, which led to a bun fight over whether some banks were being more assiduous about reporting complaints than others.
The council, which is a lobbying and development association for the general insurance industry, said just 182 complaints ended up being sent on to the authorised dispute schemes, including the Insurance and Financial Services Ombudsman, to which all insurers must belong.
All other complaints were settled, or withdrawn, in discussions between insurers and their unhappy policyholders.
Insurers lost, or partially lost 16, and settled 41 of the 182 claims that went to the disputes schemes.
The country’s largest insurers are IAG, Vero, AA Insurance and Tower.
In the year, IAG partially lost five cases, Tower lost two cases, and partially lost five more, while Vero and AA Insurance partially lost one each.
Tim Grafton, chief executive of the council said, “significant breaches do occur, but of the number of claims and complaints, they are a very, very, very small number”.
He said complaints often involved people who had not understood what they were covered for.
“Often people haven’t read their policy, or know how an excess works, or what is excluded from the policy, or might not understand that insurance responds to sudden and unforeseen events, rather than ones that are arising from gradual damage, deterioration for lack of upkeep,” Grafton said.
The data released by the council showed there were eight cases in which there were identified “significant” breaches of the Fair Insurance Code.
Seven of these breaches had been “resolved”, the council’s data showed.
The council has a code compliance committee to investigate these breaches, but the details of the eight cases have not been revealed, and nor has whether the insurers involved were punished for them as insurer Youi, which has now exited the market, was in 2016.
Grafton said several of the breaches of the code involved issues that insurers had self-reported to the Financial Markets Authority Te Mana Taitai Hokohoko, and been punished in the courts.
The code compliance committee had asked for details of the compensation for policyholders, and how they were fixing the problems, but sought to avoid delivering insurers with “double jeopardy” by punishing them twice.
The Canterbury earthquakes in 2010 and 2011, and greater scrutiny of insurers by regulators since 2018, have revealed some systemic problems policyholders experienced with their insurers.
After the earthquakes, the Canterbury Earthquakes Insurance Tribunal was set up to handle long-unsettled claims, and botched repairs, though many involved the EQC Toka Tū Ake, and it was also partly a response to the grinding slowness and cost of the court system, cabinet papers said.
Suncorp, IAG, Tower, and AA Insurance, have all had to make refunds to customers for overcharging for insurance by failing to properly apply multi-policy discounts.
In total, somewhere in the region of 200,000 policyholders had been overcharged.
While the council is choosing to highlight the data now, some of it was reported in its 2022 annual review published last year.