Disputes about life insurance
This information sheet (INFO 218) explains what you should do if you have a complaint about your life insurance policy.
It covers how to resolve your complaint depending on how you hold your life insurance policy. You can hold your policy:
- through a self-managed superannuation fund (SMSF)
- through your superannuation (super) fund
It also covers:
- breaches of the Insurance Brokers Code of Practice
- your other options for resolving the dispute
- whether you will need legal advice and representation
- ASIC's role in disputes about life insurance.
What you can do to resolve your dispute
If you have a complaint or dispute with a life insurer, super fund trustee, financial adviser or insurance broker about your life insurance policy, the first step is to pursue your complaint through their internal dispute resolution (IDR) process. They must attempt to resolve the dispute with you directly.
If you are unhappy with their response, you should take your complaint to an external dispute resolution (EDR) scheme or the Superannuation Complaints Tribunal (SCT).
Table 1: Dispute resolution process
|1||Contact your super fund trustee and follow their IDR process to complain. The fund has 90 days to deal with your complaint.||Depending on who you think your dispute is with, contact your life insurer, or the financial adviser or insurance broker who arranged your life insurance policy, and pursue your complaint through their IDR process. They have 45 days to respond to your complaint.|
|2||If you are unhappy with the outcome of the IDR process, you can lodge a complaint with the SCT.
Phone: 1300 884 114
Fax: (03) 8635 5588
|If you are unhappy with the outcome of the IDR process, you can take the matter to EDR. Your life insurer, financial adviser or insurance broker must tell you the name and contact details of their EDR scheme when they tell you about their decision on the complaint lodged through their IDR process.
Financial Ombudsman Service (FOS)
Phone: 1800 367 287
Fax: (03) 9613 6399
Credit and Investments Ombudsman (CIO)
Phone: 1800 138 422
Fax: (02) 9273 8440
Both trustees and beneficiaries of an SMSF can complain to FOS if they are dissatisfied with a decision of their insurer. If your policy is held through an SMSF and you have a dispute with the insurer, the first step is to take it to the insurer's IDR process. If you are not satisfied with the outcome, you should take the dispute to FOS.
No EDR scheme is able to assist where disputes arise between the beneficiaries of an SMSF and the trustee of that SMSF.
Where to complain if your life insurance policy is held through your super fund
Step 1: IDR process
Most super funds offer life insurance for their members. If you have life insurance through your super fund, the trustee of your fund holds your policy on trust for you as a member of the fund. Therefore, if you have a dispute, you should complain to your super fund trustee in the first instance.
Your super fund's website should have details about how to complain about a decision made by your super fund trustee or the management of the fund. Super fund trustees must properly consider and deal with complaints from fund members within 90 days. Super fund trustees must also give reasons for their decisions on request. If you're still not satisfied with the outcome of the IDR process with your super fund trustee, you can take your complaint to the SCT.
Step 2: The SCT
As a statutory body, the SCT provides independent dispute resolution services for super-related complaints and offers a free and impartial alternative to the court system. The SCT deals with complaints about decisions and conduct of trustees of super funds (excluding self-managed super funds). This includes complaints about the decisions and conduct of:
- people acting on behalf of trustees
- insurers in relation to insurance benefits provided under super funds.
The SCT can:
- help you resolve your complaint with the super fund trustee (often through negotiation or conciliation)
- ask for further information from you or the super fund trustee to help deal with your complaint, and/or
- make a decision that is binding on the super fund trustee. This may include ordering that the super fund make a payment to you or resolving the dispute in another way.
The SCT does not have any monetary limits on the claims it can deal with.
See the SCT website for information about the types of complaints the SCT can consider, and the process for making a complaint. We do not oversee the SCT.
Where to complain if you hold your life insurance policy directly
Step 1: IDR process
If you hold your life insurance policy directly, you would have obtained your policy from a life insurer or through a financial adviser or insurance broker, and these entities or persons must hold an Australian financial services (AFS) licence and have appropriate dispute resolution procedures.
You must first take your complaint to the licensee's IDR process. They have 45 days to respond to your complaint. You can find out how to access the licensees' IDR through their website.
Step 2: EDR schemes
If you are not satisfied with the licensee's response, you can take your complaint to their EDR scheme. An EDR scheme can only hear a dispute if the licensee is a member of that particular scheme. There are two ASIC-approved schemes, FOS and CIO.
The licensees must let you know which scheme they are a member of and give you that scheme's contact details when they inform you of their IDR decision.
You can also search the membership lists of FOS and CIO on their websites to find out which scheme the licensee is a member of.
EDR schemes offer a free and independent service to consumers to resolve disputes with licensees and are an alternative to going to court. The EDR scheme can:
- help you resolve your complaint with the licensee (often through negotiation or conciliation)
- ask for further information from you or the licensee to help deal with your complaint, and/or
- make a decision that is binding on the licensee, if it is accepted by you. This may include ordering that compensation be paid to you if you have suffered a loss.
There are monetary limits on the claims that EDR schemes can deal with. For more information, contact the licensee's EDR scheme.
We do not oversee the Insurance Brokers Code of Practice. FOS monitors this voluntary industry code of practice and, if you believe that a licensee has breached this code, you can report your concerns to FOS.
If you are unhappy about the decision of an EDR scheme or the SCT, or if your dispute is with the trustee of your SMSF, it may be that taking your complaint to court is the only avenue available for you to be compensated for your loss, particularly if you have suffered a large loss.
You do not need a lawyer to complain to an EDR scheme or the SCT. However, you may find it helpful to use a lawyer or other professional adviser if you think the benefits outweigh the fees.
If you are unsure of how to access legal advice, contact the Law Society in your state or territory to find a lawyer. You may do this at any stage of your dispute. You may also contact your local community legal centre for free advice regarding your life insurance policy as an alternative to paying for a lawyer. See ASIC's MoneySmart website for contact details of community legal centres and consumer credit and financial legal services in your state.
ASIC provides oversight to FOS and CIO (but not the SCT) to ensure they are working effectively in dealing with consumer complaints. Our view is that individual disputes between consumers and licensees are best resolved through the IDR and EDR processes. We do not provide dispute resolution services like EDR schemes do.
In our oversight role, we do take feedback about your experience with an EDR scheme; however, we are not able to intervene in individual decisions schemes make.
ASIC also has an oversight role regarding the insurance industry. However, this role is limited to considering regulatory issues that may impact the market more broadly – any action we take against life insurers is unlikely to resolve your specific dispute.
Where can I get more information?
For more information about what to do if you have a dispute with a licensee, see Information Sheet 174 Disputes with financial services or credit providers (INFO 174).
For more information about EDR schemes' decisions, see Information Sheet 176 External dispute resolution: What to do if you are unhappy with a scheme decision (INFO 176).
See ASIC's MoneySmart website for more information about EDR schemes, including sample complaint letters for lodging a dispute with your licensee.
Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.
This is Information Sheet 218 (INFO 218), updated in February 2017. Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.