Last year’s extreme weather has led to a record number of complaints to the Insurance and Financial Services Ombudsman scheme.
The 479 complaints received for investigation in the year from July 1, 2023 to June 30, 2024 is the most in the 30-year history of the scheme.
Ombudsman Karen Stevens said 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,” Stevens said.
“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.
“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.”
Stevens said 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 inquiry 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 said.
Scope of cover was the top issue for complaints investigated by the scheme. Stevens said 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 said.
Stevens said 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 said.
Of the complaints investigated, 68% were about general insurance, which includes house, contents, vehicle and travel insurance. Twenty-one percent 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%.
