New Zealand’s Insurance & Financial Services Ombudsman Scheme (IFSO) is warning consumers to verify artificial intelligence-generated advice before relying on it in complaints against insurers, with the organisation saying inaccurate outputs are creating confusion and unrealistic expectations.
According to online publication Insurance Business Magazine, the IFSO said more consumers are using AI tools to help draft insurance complaints or assess likely dispute outcomes, but some responses have included incorrect legal interpretations, fabricated case references and misleading statistics about complaint success rates.
Insurance & Financial Services Ombudsman Karen Stevens told Insurance Business Magazine the issue reflects the growing use of AI across financial services, but warned that unverified content can complicate dispute resolution.
In one example cited by the IFSO, a Google AI-generated summary reportedly claimed insurance claim decisions were “frequently overturned” and suggested “up to 80–90 per cent of cases can result in success if people persist” – figures Stevens described as misleading.
“Many people come to us hoping we can put things right, but if the law or the contract does not support their position, we cannot change that, even where the outcome feels unfair,” Stevens said.
She also noted that some AI-assisted complaints had become excessively long, with some submissions running to 300 pages.
“We have seen complaints which are 300 pages long. But more words are not necessarily better. Clear information about what has gone wrong is much more useful than multiple pages referencing legislation and case law,” she said.
The ombudsman also warned consumers to be cautious about uploading sensitive personal or financial information into public AI platforms, particularly free tools where data storage and reuse practices may be unclear.
The IFSO said consumers using AI should cross-check outputs against trusted New Zealand-based sources, review their policy wording directly and ensure any AI-drafted complaint accurately reflects the core issue in dispute.
While AI can be a useful support tool, Stevens said it should be treated as an aid rather than a substitute for policy wording, legal advice or professional guidance.
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