Australian life insurance claim disputes and denials increase

The Australian Financial Complaints Authority (AFCA) reported an increase in life insurance claim disputes during the 2025–26 financial year. While overall life insurance complaints rose by 3% to 1,561, specific issues saw sharper increases: complaints regarding the denial of claims rose by 20%, and complaints concerning delays in claims handling increased by 31%.

Income protection remains the most frequently complained-about product, accounting for 38% of all life insurance complaints with 599 total cases. Term life insurance complaints also saw an uptick, while complaints regarding total and permanent disability fell slightly. AFCA noted that income protection claims often involve complex assessments, particularly for self-employed individuals.

Conversely, complaints related to incorrect fees, premiums, or charges decreased by 16%. AFCA emphasized the need for insurers to provide clear policy information and to process claims promptly to avoid financial consequences for claimants facing illness or reduced work capacity.