The Insurance and Financial Services Ombudsman (IFSO) scheme has received a record number of nearly 5,000 enquiries over the past year, marking a 21% increase from the previous year.
Karen Stevens, the IFSO ombudsman, revealed that the majority of people contacted the IFSO scheme regarding customer service issues and delays.
The scheme also investigated the highest number of complaints in its almost 30-year history, with 479 complaints received for investigation between 1 July 2023 and 30 June 2024.
According to Stevens, the 46% increase in complaints from the previous year was largely due to the extreme weather events of 2023, which led to a significant rise in insurance claims.
“About 8% of the complaints we received were about insurance claims from the Auckland floods and Cyclone Gabrielle. But we also received many more complaints relating to business-as-usual insurance claims, which were impacted by the delays caused by the approximately 118,000 weather event claims,” Stevens said.
Stevens acknowledged the challenges faced by insurers due to the impact of severe weather events, which affected their ability to respond swiftly and effectively to claims.
“Consumers have understandably been frustrated by the long time it’s taken to get their claims resolved,” she noted. “That said, insurers have taken less time to process claims than they did after the Christchurch earthquakes, so clearly there, have been lessons learnt and improvements made.”
The rising cost of insurance, partly driven by the weather events of 2023, has also become a significant issue for consumers, especially amid the broader increase in the cost of living.
“The increase in the cost of insurance was one of our top five enquiry issues this year,” Stevens said. “This is unsurprising given the ongoing financial pressure on households. We have a limited ability to look at complaints about pricing of insurance and increases in premiums, but if people are struggling, we recommend they talk to their insurer about their options, or shop around for quotes from other insurers. Sometimes, choosing a higher excess can reduce premiums.”
The top issue for complaints investigated by the IFSO scheme was the scope of cover.
Stevens pointed out that this often stems from consumers misunderstanding what their policy covers.
“For example, most house insurance only covers sudden damage, not gradual damage. If a house already had issues before a weather event, it's unlikely that insurance will cover the cost of fixing those pre-existing problems,” she said. "Expert evidence, such as an independent builder or engineer’s report, is often crucial in cases where the scope of cover is disputed," she added.
Of the complaints investigated by the IFSO scheme, 68% were related to general insurance, including house, contents, vehicle and travel insurance. Health, life or disability insurance accounted for 21% of complaints, while 11% were about other financial services such as loans and credit or financial advice.
House insurance topped the list of complaints, representing 24% of all complaints, followed by travel insurance at 18% and motor vehicle insurance at 17%.
