When you pay for insurance, you expect peace of mind. But what happens when your insurer doesn’t play fair? Unfair claims practices—ranging from delays to outright denials—can leave Australians stranded during their toughest moments. With new regulations rolling out in 2025, it’s crucial to know your rights and how to safeguard yourself from these dodgy tactics.
What Are Unfair Claims Practices?
Unfair claims practices refer to unethical or unlawful conduct by insurers during the claims process. This can include:
- Unreasonable claim delays
- Rejecting claims without valid reason
- Offering settlements far below the claim’s value
- Failing to properly investigate before making a decision
- Withholding key policy information
In Australia, such practices are not just frustrating—they’re often illegal. The Australian Securities and Investments Commission (ASIC) and the Australian Financial Complaints Authority (AFCA) are cracking down, but problems persist, especially after widespread natural disasters and the COVID-19 pandemic put insurers under pressure.
2025 Regulatory Changes: Raising the Bar for Insurers
This year, several new measures are coming into force, aimed squarely at tackling unfair claims practices:
- Stricter timeframes: Insurers must now meet tighter deadlines for assessing and paying claims, with penalties for unnecessary delays.
- Enhanced transparency: From July 2025, insurers must provide clear, written reasons for any claim denial or reduction, referencing specific policy terms.
- Expanded ‘Unfair Contract Terms’ rules: The Treasury Laws Amendment (Enhancing Consumer Protection) Act 2025 extends protections to more types of insurance policies, banning terms that are excessively one-sided or unclear.
- Improved complaint pathways: AFCA has received additional funding to resolve disputes faster, with a new digital portal for tracking progress in real time.
These reforms reflect lessons from the 2018 Royal Commission and subsequent reviews, aiming to restore trust and protect everyday Australians from being let down when they need help most.
Spotting and Responding to Unfair Claims Practices
If you suspect you’re the victim of an unfair claims practice, here’s what to watch for—and how to respond:
- Stonewalling or vague responses: If your insurer keeps asking for more documents or doesn’t provide clear answers, push for timelines in writing.
- Lowball offers: Don’t accept the first offer if it seems off—request a breakdown of how the insurer calculated your payout.
- Unjustified rejections: Ask for the exact clause or exclusion used to deny your claim. If they can’t explain, you may have grounds to dispute.
In 2025, you have more power than ever:
- Submit a formal complaint to your insurer’s internal dispute resolution (IDR) process—they’re now legally required to respond within 30 days.
- If unresolved, escalate to AFCA. The online portal makes it easier to upload evidence and track case progress.
- Consider lodging a report with ASIC if you believe the insurer is breaching industry codes or the law.
Real-World Example: Flood Claims in Queensland
After the 2024 Queensland floods, hundreds of policyholders reported delayed or denied claims for water damage. One family in Rockhampton waited five months for an answer—well beyond the new 2025 60-day decision rule. With support from the updated AFCA system, their case was resolved within two weeks after escalation, resulting in a full payout and an apology from the insurer.
This example highlights the power of the new reforms and the importance of knowing your rights.
Protecting Yourself: Tips for 2025 and Beyond
- Keep thorough records: Save all correspondence, photos, and documents related to your claim.
- Know your policy: Insist on a plain-English summary from your insurer, as required by the new rules.
- Act early: Don’t wait if you sense stonewalling—initiate complaints promptly to trigger legal timelines.
- Use the digital tools: Register with the new AFCA portal for real-time updates and easier evidence submission.
