If you are unhappy with a claim denial ruling, and believe the internal disputes resolution process was not handled in a satisfactory manner, you can contact AFCA and lodge a dispute. AFCA can give you a welcome alternative to launching legal action against an insurer, which could end up being hideously expensive!
If you do not agree with your insurance claim being denied, and feel the insurer’s decision lacks sufficient reasoning, there are two levels of claim dispute escalation available to you:
1. IDR – Internal Dispute Resolution
2. AFCA – Australian Financial Complaints Authority
The first level of escalation – IDR is handled by the Internal Dispute Resolution (IDR) body within the insurance company. The insurance company has 15 business days to advise whether the initial decision on the claim will stand or be overturned.
In the event that the claim ruling stands, and you feel the IDR body’s reasoning is unsatisfactory, then we will advise you to escalate the claim to the – Australian Financial Complaints Authority (AFCA).
Who are AFCA?
The purpose of AFCA is to impartially and independently resolve disputes between consumers which can include small businesses, and AFCA member financial service providers.
AFCA is a national independent organisation with its own code of conduct and reporting facilities back to the Australian Securities and Investments commission (ASIC). All members of AFCA are bound by the Constitution of the Financial Ombudsmen Service Limited.
AFCA cannot adjudicate on all classes of insurance, and there are also limitations to amounts that it can award – specific details are available on the AFCA website.
It is not a Court nor is the information that it collects admissible in a Court of Law, nor is its decision binding upon you, but importantly, it is binding on the member financial services provider.
AFCA can give you a welcome alternative to launching legal action against an insurer, which could end up being hideously expensive!
You will also be happy to note that the AFCA service is free for all applicants! It comes at no cost other than the time you are required to invest when lodging a dispute.
When should you use AFCA?
If you are unhappy with a claim denial ruling, and believe the internal disputes resolution process was not handled in a satisfactory manner, you can contact AFCA and lodge a dispute.
AFCA can then go about investigating the dispute further, and attempt to resolve the matter on your behalf.
How does AFCA handle a claim dispute?
In our experience, lodging a dispute with the AFCA is a very simple procedure and can be done via their website, by email info@afca.org.au or alternatively, by phoning them directly on 1300 780 808.
Essentially the process is as follows:
- Once the dispute has been lodged, and it is deemed to fall within the jurisdiction of the body, AFCA will investigate the dispute further, and attempt to resolve the matter on your behalf.
- Dispute resolution methods may involve negotiation, conciliation or coming to a decision. For the matter to be resolved expeditiously, we always encourage our clients to ensure all information relating to the dispute be provided at the start of the process.
- When AFCA has completed their investigation, they will publish a written decision on the matter which is binding on the financial services provider, if, and only if you decide to accept their judgement.
If you would like to obtain further advice on taking a claim denial to AFCA, we have gone through this process numerous times, and will be more than happy to assist.
This article forms part 2 of our educational piece on escalating claim denials. You can read part 1 here – When the claim is denied, is it time to play the IDR card?
For more information on IDR’s, please contact Whitbread Insurance Brokers on 1300 424 627 or email info@whitbread.com.au
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 License Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.
