The Australian Financial Complaints Authority (AFCA) has launched a public consultation on its draft approach to handling general insurance claims complaints. This update is particularly relevant for Australian insurers and stakeholders focused on improving claims practices and maintaining compliance
What’s Changing?
The draft guidance reinforces the requirement that insurers act with the “utmost good faith” when managing claims. This includes:
AFCA emphasizes that standard timeframes (such as those outlined in the General Insurance Code of Practice) are only a baseline. Delays, especially in straightforward cases (e.g., a broken window), can still be deemed unreasonable even if they meet formal deadlines.
Cash Settlements Under Scrutiny
Cash settlements—often used to resolve claims quickly—must now be clearly fair and appropriate for the claimant’s situation. AFCA warns against defaulting to cash settlements, particularly for vulnerable customers dealing with complex repairs.
Real-World Implications
For Australian insurers and underwriting agencies, this guidance raises the bar on customer service and operational transparency. It’s no longer enough to follow the process—the experience must be demonstrably fair.
Consultation Now Open
The consultation runs until August 29, 2025, with the final approach document expected later this year. Insurers are encouraged to review the draft and submit feedback.
📄 AFCA’s Consultation Document
At InsuredHQ, we see this as a strong signal for the industry to double down on claims handling quality and adaptability—especially for smaller carriers who often rely on leaner ops models. Stay tuned as we continue to track developments.