Australia’s motor insurance sector has emerged as a key pressure point in the Australian Financial Complaints Authority’s (AFCA) 2024-25 Annual Review, with motor vehicle policies again topping the list of the most complained-about financial products.
Comprehensive motor vehicle insurance accounted for nearly one-third of all general insurance complaints, as the total number of general insurance disputes lodged with AFCA rose 17 per cent to 34,231 – in stark contrast to a four per cent decline in overall complaints across the financial services sector.
AFCA noted that delays in claim handling continued to dominate customer frustrations. These were often linked to national shortages of vehicle parts and skilled repairers, particularly as the market adapts to electric vehicle repairs and supply-chain bottlenecks. The ombudsman urged insurers to improve transparency and communication around delays to help maintain consumer trust.
Complaints about add-on insurance products more than doubled, with more than 7,800 lodged in the past year, up from 2,774 in 2023-24. Misleading product information and confusion over coverage terms were among the most common issues, followed by disputes about claim amounts and denials of claims.
The review also revealed that many claim delays were preventable, with AFCA encouraging insurers to strengthen their internal dispute resolution (IDR) processes to identify and resolve issues earlier. It warned that persistent service failures risk undermining public confidence in the insurance sector.
While banking and finance complaints fell nine per cent – including a 45 per cent reduction in scam-related cases – general insurance remained a growth area for disputes. AFCA chief ombudsman David Locke said high complaint volumes “highlight the need for industry to do more to prevent avoidable complaints,” noting that the organisation delivered $390.8 million in compensation across all financial sectors in the year.
Overall, AFCA’s findings suggest that as insurers grapple with economic pressures and repair-market constraints, transparent communication and improved claims handling will be central to restoring consumer confidence in motor and general insurance.