Not satisfied with a Strata claim outcome? There are options to take it further.

Receiving a Letter of Denial for an insurance claim isn’t a particularly welcome outcome, especially if you feel the insurance claim should have been covered under the policy.

Before tearing your hair out however, take comfort from the fact that a denial letter doesn’t have to be the end of the road for a claim…!

An insurer’s position for denying insurance claims is typically well substantiated, with denial letters clearly identifying the reason(s) why a claim is declined. It is common practice for the insurer to refer to extracts from their policy wordings to support the decision.

However, if you or your clients feel an insurer’s decision lacks valid reasoning, or the claim settlement isn’t sufficient for adequate recovery, there are options available to you. First and foremost, Whitbread can escalate the claim to the insurer’s Internal Disputes Resolution (IDR) team for further investigation.


The insurance claim escalation process

Under Australian Law (Corporations Act 2001 – Regulatory Guide 165.1), institutions e.g. insurers who are licensed through the Australian Securities & Investments Commission (ASIC), are required to have 2 distinct disputes and complaints resolution processes:

  1. an internal disputes resolution (IDR) process, where the dispute is dealt with by the insurer, and,
  2. an external disputes resolution (EDR) scheme where an independent body is consulted to provide impartial advice.

These mechanisms are mandatory, and ensure that any disputes or complaints lodged with an insurer are dealt with in a manner that complies with ASIC standards.

How Whitbread assist you:

Whitbread’s strata claims specialists manage insurance claims on behalf of our clients, always striving to obtain the maximum settlement possible. When claims aren’t resolved as initially expected, we will handle the IDR and EDR process on your client’s behalf in pursuit of a better outcome.

What does the IDR escalation process involve?

If a claim is denied, Whitbread take several steps to ascertain on your behalf whether or not a claim should be escalated to an insurer’s IDR team. We will:

  • Further scrutinise the cause of damage, including proximate causes i.e. related insurable events that may have contributed to the damage,
  • Study the policy wording, paying particular attention to policy definitions, conditions and exclusions,
  • Review all relevant documentation such as assessor reports, or the claim form,
  • Evaluate the reasoning for the insurer’s denial,
  • Seek further particulars from the claimant where necessary,
  • Apply precedent whereby insurers have previously paid claims under similar circumstances.

If we believe the claim should be paid after reviewing the above, we will seek your consent to submit the claim to the insurer’s IDR team, managing the dispute on your behalf.

The insurer’s IDR process

Upon receipt of an IDR request, the insurer has a period of 15 business days to advise whether their initial decision on a claim will stand, or be overturned. From this point there are three potential outcomes:

  1. The insurer agrees to overturn their initial decision,
  2. The insurer maintains their decision to deny the claim, or
  3. The insurer elects to make further enquiries before making a decision on whether to maintain or overturn their initial ruling.

Should the dispute be resolved in your favour, the insurer will overturn their initial ruling and forward the claim settlement via Whitbread.

Why can a claim’s original ruling be overturned by an IDR?

By submitting a claim to the IDR process, both the client and insurers have the opportunity to submit further substantiating evidence that may have been omitted at the time of lodgement i.e. condition reports, pre-damage photos.

This type of information can help shed further light as to the cause(s) of a claim, aiding your client’s bid to prove that damage was due to an insurable event.

Successful IDR example:

A ground floor resident of a strata property submitted a claim for water damage, whereby water was seeping through the roof of the bathroom ceiling via the unit upstairs.

  • Initially the insurer denied the claim, as the damage was deemed to be caused by wear and tear on the upstairs unit’s wastewater pipe (not covered under Strata Insurance), and because the damage appeared not to be from a sudden or unforeseen event. It also appeared to have been caused over an extended period of time.
  • Of the belief that the water damaged ceiling should be repaired regardless, Whitbread put forth the claim to the insurer’s IDR team.
  • While the insurer still declined to provide compensation for the upstairs unit’s broken pipes (as it was specifically excluded from the policy wording), they overturned their decision for the downstairs unit’s damaged ceiling, and provided settlement to pay for repairs.

However if an IDR is unsuccessful, and your client is dissatisfied with the insurer’s reasoning for upholding their original ruling, there is an additional option to further escalate the claim via the insurer’s External Disputes Resolution (EDR) scheme.

Escalating a claim to External Disputes Resolution Strata image orange blue

EDR involves submitting the dispute to Australia’s leading independent dispute resolution service, the Australian Financial Complaints Authority (AFCA). AFCA provide free mediation services for claim disputes involving financial institutions.

About AFCA

AFCA is an alternative to launching legal action against an insurer, which could be an expensive exercise.

AFCA 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 e.g. the insurance company.

How does AFCA handle a claim dispute?

In our experience, lodging a dispute with AFCA is a very simple procedure. It can be done via their website, by email or by phoning AFCA directly on 1800 931 678.

Essentially the process is as follows:

  • Once a dispute is lodged, and is deemed to fall within AFCA’s jurisdiction, AFCA will investigate the dispute further, attempting to resolve the matter on the insured’s behalf.
  • Dispute resolution methods may involve negotiation, conciliation or coming to a final decision.
    TIP: For the matter to be resolved expeditiously, we always encourage clients to provide all information relating to the dispute at the start of the process.
  • When AFCA has completed their investigation, they will publish a written decision on the matter. This decision is binding on the financial services provider, but only if the insured decides to accept their judgement.

Whitbread’s claims specialists are highly experienced in aiding clients with this process, and are here to assist should your clients wish to pursue this avenue.

Insurance claim settlement is a crucial element of our business, and we have built a dedicated claims department to ensure clients have the best chance of success in a claim. We will take the lead in managing your clients’ insurance claims, and will always strive to obtain the maximum settlement applicable under the policy.

For more information on the services provided by AFCA, visit their website:

If you need to lodge a claim, or would like more information on the IDR or EDR process for your clients, please contact your Whitbread claims consultant:

T: 1300 424 627

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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.

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