Income protection generates complaints

Disability insurance, a growth market for the insurance industry, is also a big cause of complaints to the Insurance and Savings Ombudsman (ISO).

More than 60% of complaints made to the ISO in the year to June 30 were in some way related to health and disability claims, Ombudsman Karen Stevens says in the ISO’s latest annual report.

As a result, though the number of complaints fell during the year, the complexity of the cases had increased.

"Complaints about disability insurance require more energy and a greater understanding – not just of the law – but of how the complainant perceives the complaint at an emotional level," Stevens says.

In response to several complex total permanent disability cases, her office has developed a two-stage process for handling complaints.

If it finds that the insurer has not acted reasonably in forming an opinion, it will evaluate the medical evidence and replace the insurer’s decision with one of its own.

But if there is insufficient medical evidence to replace the insurer’s decision, the ISO will now obtain independent medical evidence on which to base its decision.

This might lead to an increase in the time taken to resolve TPD complaints, Stevens says. But she believes this is the only way this type of complaint can be properly resolved.

The ISO received 236 complaints in the year and resolved 234. Of the 234 resolved cases; 6% were upheld, 4% were partly upheld, 2% were withdrawn and 78% were not upheld.

Fire and general insurance made up 65% of complaints, with health contributing 4%, and life and savings 3l%.