Record Year Of Complaints To The IFSO Scheme

The Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) Scheme received a record number of almost 5,000 enquiries in the past year, a 21% increase on the previous year. Karen Stevens, the Insurance & Financial Services Ombudsman, says that most people contacted the IFSO Scheme about customer service issues and delays.

The IFSO Scheme has also investigated the highest number of complaints in its almost 30-year history, with a total of 479 complaints received for investigation in the year from 1 July 2023 – 30 June 2024. Stevens says the 46% increase in complaints from the previous year was mostly due to the extreme weather events of 2023, which caused a big uptick 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,” says Stevens.

“The extensive nature of the weather events obviously impacted the insurers’ abilities to respond quickly and effectively to claims, and consumers have understandably been frustrated by the long time it’s taken to get their claims resolved,” says Stevens. 

“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,” she says.

Stevens says that the rising cost of insurance, caused in part by the weather events of 2023, is also becoming an issue for people when the cost of living has gone up across the board.

“The increase in the cost of insurance was one of our top five enquiry issues this year. 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,” she says.

Scope of cover was the top issue for complaints investigated by the IFSO Scheme. Stevens says that, in some cases, this issue arises from consumers not understanding 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 says.

Stevens says that expert evidence is often key in cases where the scope of cover is disputed.

“Getting an independent builder or engineer’s report is important if you disagree with what your insurer is saying,” she says.

Of the complaints the IFSO Scheme investigated, 68% were about general insurance, which includes house, contents, vehicle and travel insurance. 21% of complaints were about health, life or disability insurance, and 11% were about other financial services such as loans and credit, or financial advice.

Consumers complained about house insurance the most, accounting for 24% of all complaints. This was followed by travel insurance at 18%, and motor vehicle insurance at 17%.

The IFSO Scheme resolves complaints about insurance and financial services, and is independent, fair, and free for consumers.

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