Court proceedings about a civil dispute (not a criminal case). through the courts is one way of resolving insurance disputes, but it is often costly and time consuming. A number of organisations deal with various kinds of insurance disputes so long as the complaint is not or has not been referred to the courts. They provide a number of alternatives to litigation for policyholders. The Insurance Code (pt 11) sets out processes for the internal and external resolution of disputes with insurers.
Australian Financial Complaints Authority
On 1 November 2018, the Financial A public official appointed to investigate citizens’ complaints against government departments and statutory authorities. A specialised ombudsman resolves consumer complaints in a particular industry, for example the banking ombudsman for the banking industry. See also statutory authority. Formal delivery of legal documents to a person to tell them there are court proceedings against them which they must defend, or to make sure a witness in a case knows when they have to go to court to give evidence. was replaced by the Australian Financial Complaints Authority (AFCA). AFCA is a free national service available to all consumers.
AFCA assists to resolve disputes between consumers and member financial services providers. Any financial service provider conducting business in Australia can be a member of AFCA. The dispute resolution process covers financial services disputes involving those relating to banking, A debt that does not have to be paid until some future time. Being allowed to pay later, in the future, for something you are getting now. loans, general insurance, life insurance, financial planning investments, stockbroking, managed fund and pooled superannuation funds.
In respect of insurance disputes, AFCA can only consider a dispute that arises from or relates to an entitlement or benefit under a general insurance policy by a person who is specified or referred to in the policy (whether by name or otherwise) as a person to whom the policy extends.
There are limitations. AFCA may only consider a dispute about a general insurance policy that is:
- a retail general insurance policy (this includes the insurances listed in ‘Eligible contracts’, above);
- a residential strata title insurance product;
- a small business insurance product;
- a medical A promise to pay compensation to cover losses or expenses that may arise in the future if some stated event occurs. For example, if a business partnership ends and one partner continues to run the business, they generally agree to indemnify the others against any claims against the business in the future. Insurance contracts also indemnify the insured against stated risks. insurance product; or
- a title insurance policy.
Other disputes with insurers and insurance brokers may be dealt with, but only if all parties agree.
AFCA may not consider a dispute regarding a decision to refuse to provide insurance cover except in circumstances where the decision was made indiscriminately, maliciously or on the basis of incorrect information.
AFCA can accept claims up to $1 million. However, the maximum total AFCA can (1) A standard set of working conditions, including pay rates, for a particular industry. (2) A court decision that a party receive compensation, such as an award of damages to compensate them for physical injuries. is:
- for claims made on life or general insurance policies dealing with income stream risk or similar advice: $13 400 per month;
- for uninsured third-party motor vehicle accident claims: $15 000; and
- for all other claims: $500 000.
AFCA first encourages consumers to attempt to resolve their dispute through the insurer’s internal dispute resolution process. If this is not successful, consumers can then contact AFCA and they A document that sets out what a person wants to happen to their money and other property after they die. assess whether they can handle the dispute.
AFCA may initially manage the dispute through An approach to dispute resolution where both parties discuss the matter in dispute between them, with the aim of reaching a settlement through a consensus, compromise or agreement. See ADR (alternative dispute resolution); arbitration; conciliation; mediation. and A form of alternative dispute resolution. The parties negotiate with the help of an independent person called a conciliator. The aim is to sort out the dispute by mutual agreement, rather than having a decision made by a court or tribunal. See also arbitration; mediation; negotiation.. Otherwise, AFCA will investigate the claim and issue a recommendation.
In assessing a dispute, AFCA will take into account legal principles, applicable industry codes and guidelines, and good industry practice. AFCA may also take into account specialist input.
A recommendation is a preliminary decision on the merits. AFCA will ask the parties to consider accepting the recommendation. Parties have 30 days to agree on the recommendation.
Otherwise, AFCA will proceed to a A finalisation, especially a decision made by a court or tribunal to finalise (determine) a case. . A determination is a final decision on the merits. (For information about merits reviews, see Chapter 12.2: Appealing government and administrative decisions.)
A Under the Australian Consumer Law, a person who buys goods or services for less than $40 000 or for personal or home use. is not bound to accept AFCA’s determination. However, if a consumer wishes to accept a determination, they must inform AFCA and the financial services provider within 30 days. Financial services providers are bound by AFCA’s determinations.
For AFCA’s contact details, see ‘Contacts’ at the end of this chapter.
Small claims are heard in VCAT’s Civil Claims List (see ‘Small claims: VCAT’s Civil Claims List’ in Chapter 7.4: Taking action as a consumer).
VCAT offers a simple and inexpensive way for policyholders to resolve disputes. It may not hear a claim that has already been taken to An independent body that hears legal claims brought by parties and decides between them. Serious cases are heard by a judge and jury, or just a judge. Less-serious cases are heard by a magistrate..
VCAT will arrange for a The time and place at which a court or tribunal hears the parties argue their case and makes a decision. of the policyholder’s dispute. Policyholders may seek legal help to prepare themselves for the hearing. In small claims, the policyholder (and insurer) cannot have a lawyer A written law made by parliament. Also called an ‘Act of parliament’, ‘statute’ or legislation. for them at the hearing but may be represented by a friend or by a worker from a community organisation. Contact VCAT for more information (see ‘Contacts’ at the end of this chapter).
Australian Prudential Regulation Authority
The Australian Honest and careful conduct in finance and business management. Regulation Authority (APRA) is the prudential regulator of banks and other authorised deposit taking institutions, insurance companies and superannuation funds. It is a Found in a statute of delegated legislation. For example, a statutory authority or body is aperson or organisation that has special powers given by parliament to do work for the public benefit. authority whose board includes representatives from the Reserve Bank and the Australian Securities and Investments Commission.
Policyholders who believe their grievance has not been properly managed by the insurer should contact APRA for advice. APRA will not resolve the dispute but will advise the policyholder on the appropriate course of action.
APRA oversees general insurers through supervision groups within both the Diversified Institutions Division and the Specialised Institutions Division. Policy issues are dealt with by the General Insurance Cross Divisional Committee.
For APRA’s contact details, see ‘Contacts’ at the end of this chapter.