How to Escalate an Insurance Dispute to AFCA

🏛️ What is AFCA?🔗

The Australian Financial Complaints Authority (AFCA) is Australia's free, independent external dispute resolution (EDR) scheme for financial services complaints, including every type of insurance dispute. It was established under the Corporations Act 2001 and is approved by ASIC. Every Australian insurer holding an Australian Financial Services Licence is required to be an AFCA member.

🎯 The essential: AFCA decisions are binding on the insurer, but not on you. If AFCA rules in your favour and you accept the determination, the insurer must comply. If you're unhappy with the outcome, you're free to reject it and pursue other legal avenues, including court action.

⏱️ When should you go to AFCA?🔗

You can't go straight to AFCA. You must first exhaust your insurer's Internal Dispute Resolution (IDR) process. Under ASIC's Regulatory Guide 271 (RG 271), insurers must provide a written IDR response within 30 calendar days of receiving your complaint.

If 30 days pass with nothing, or you receive the final IDR response and disagree with it, you can escalate to AFCA. If the insurer can't meet the 30-day deadline because the complaint is genuinely complex, they're required to send you a delay notification explaining the reason, and telling you about your right to escalate to AFCA immediately.

Time limits for lodging an AFCA complaint about insurance are strict, so don't let a dispute drag on indefinitely before escalating:

• 6 years from when you first became aware of the loss, or
• 2 years from the date of the insurer's final IDR response

Whichever falls earlier applies.

This process, insurer IDR first, then AFCA if you're not satisfied, is the same escalation path we cover in more detail in our guide to what to do when an insurance claim gets rejected. If your dispute is specifically about a Total and Permanent Disability claim, our article on why TPD claims get rejected covers the definition traps insurers rely on and how to build a stronger appeal before you ever reach AFCA.

📋 What AFCA can (and cannot) help with🔗

AFCA can consider a broad range of insurance disputes, including:

• Claim denials
• Claim delays
• Disputed payout amounts
• Poor service or misleading conduct
• General insurance disputes (home, car, travel, business interruption)
• Life insurance disputes (life cover, income protection, TPD)

Its powers to award compensation are capped, and those caps were last adjusted on 1 January 2024, with the next scheduled review due 1 January 2027. Disputed payout amounts are a common trigger for a complaint, especially when a sum insured turns out to be well below what a rebuild or replacement actually costs. If that sounds familiar, it's worth reading our guide to how underinsured Australians really are before you lodge, so you can show AFCA exactly how the shortfall arose.

AFCA cannot help with:

• Disputes exceeding the monetary limits above
• Matters already before a court
• Certain excluded insurance product types for small businesses (professional indemnity, public liability, industrial special risks)
• Complaints lodged outside the time limits

🗂️ What to gather before you lodge🔗

A well-organised complaint moves faster and lands better. Before you lodge, gather:

• Your policy documents: Certificate of Insurance and PDS
• All correspondence with the insurer (emails, letters, and notes of any calls with dates, times and names)
• The insurer's IDR final response letter
• Supporting evidence: photos, receipts, repair quotes, medical records, expert reports
• A written, chronological summary of what happened

📝 How to lodge an AFCA complaint, step by step🔗

1. Create an account at afca.org.au/make-a-complaint
2. Complete the complaint form: be factual and chronological, and reference specific policy wording where relevant
3. Upload your supporting documents, labelled clearly
4. AFCA registers your complaint and notifies the insurer
5. Case management and conciliation begins, many complaints resolve at this stage
6. A formal determination follows if the dispute stays unresolved

⌛ How long does it take?🔗

The average time to close all complaints across AFCA was 74 days in the 2024-25 annual review. General insurance complaints specifically averaged 93 days in 2023-24. Simple complaints can close within 30 days through early conciliation.

AFCA received more than 100,000 complaints for the second year in a row in 2024-25. Claim delays were the single biggest issue raised in insurance complaints, so if slow handling is your problem, you're far from alone.

✅ Tips for presenting a strong complaint🔗

• Be factual and chronological, not emotional
• Quote specific policy wording
• Stick to the actual dispute rather than every grievance you have
• Be specific about the outcome you want, an exact dollar amount or action
• Provide clear, organised, numbered evidence
• Respond promptly to AFCA's requests for information

⚖️ What happens after a determination?🔗

If AFCA rules in your favour and you accept the determination, the insurer is legally bound to comply. If you reject it, you can still pursue court action instead.

If AFCA rules against you, the determination isn't binding on you either way. You can seek independent legal advice and pursue court action if you believe that's the right next step.

🎯 The essential: If you're considering rejecting a favourable determination because you think court could get you more, get legal advice first. Weigh the extra amount you might win against the cost, time and risk of litigation before you decide.

❓ Frequently asked questions🔗