Surge in Insurance Complaints Highlights Industry Challenges

Home-building insurance complaints have risen to an average of 24 per day in the first quarter of 2026, the highest level since 2022-23. Similarly, motor vehicle insurance complaints have escalated to 44 per day, up from 31 daily in the previous financial year. These figures underscore a growing dissatisfaction among policyholders regarding the timeliness and efficiency of claim handling.

Emma Curtis, AFCA's lead ombudsman for insurance, attributes the surge in complaints to several factors, including shortages of materials and skilled labour, particularly affecting home building and motor insurance sectors. The increasing prevalence of electric vehicles has also contributed to delays, as insurers struggle to source specific parts and qualified mechanics.

Internal complaints to general insurers have also seen a significant uptick, rising from 1.6 million in 2023-24 to nearly 2.1 million in 2024-25, according to the Australian Securities and Investments Commission (ASIC). Notably, nearly 40% of complaints reaching AFCA had not been logged internally by the insurers, indicating potential gaps in internal complaint management processes.

The Insurance Council of Australia (ICA) acknowledges the challenges faced by the industry, noting that insurers processed an average of 86,000 motor and household insurance claims daily in 2025. However, the ICA warns that delays are expected to worsen due to rising fuel and freight costs, which are disrupting supply chains and increasing the cost of materials and labour necessary for repairs.

Consumer advocacy groups express concern over the industry's response to these challenges. Meg Dalling, assistant director of policy at the Consumer Action Law Centre, points out that despite commitments from insurers to improve their processes following a parliamentary inquiry into the 2022 floods, significant improvements have yet to materialize.

In light of these developments, policyholders are advised to maintain thorough records of all communications with their insurers and to seek assistance from consumer protection agencies if they encounter unreasonable delays or denials in their claims. The current situation underscores the need for systemic reforms within the insurance industry to enhance efficiency, transparency, and consumer trust.