When an insurance claim is disputed: the Codes of Practice and how AFCA can help

Most insurance claims are paid without any real drama, but disputes do happen — a claim gets denied, the amount offered is disagreed with, or there's a concern about how a broker or insurer handled things. Australia has a reasonably structured path for working through that, and it's worth understanding before you need it rather than during a dispute.

One relevant piece of law sits earlier in the process, at the point a policy was taken out. Since 5 October 2021, the Insurance Contracts Act 1984 has imposed a duty on consumers to take reasonable care not to make a misrepresentation to an insurer before entering into a consumer insurance contract, replacing the older and stricter duty of disclosure. The standard is what a reasonable person in the consumer's circumstances would be expected to know or disclose — not perfect hindsight — and an insurer's remedies differ depending on whether a misrepresentation was fraudulent or simply careless, and on what the insurer would actually have done, on what terms, had the true position been known at the time. This matters directly if an insurer later argues that a claim should be reduced or refused because of something said, or not said, when the policy was arranged.

Two industry codes sit alongside the legal framework. The General Insurance Code of Practice, administered by the Insurance Council of Australia and overseen by an independent Code Governance Committee, sets standards insurers must meet on claims handling timeframes, financial hardship, and support for customers experiencing vulnerability. The Insurance Brokers Code of Practice, administered by NIBA, sets separate standards specifically for broker conduct. Both codes are currently being substantially rewritten — the General Insurance Code's new draft went through public consultation in mid-2026, and NIBA's rewritten Insurance Brokers Code closed its own consultation in August 2026, targeting a January 2027 launch — part of a broader push across the industry toward stronger, more enforceable consumer protections.

If working through the insurer's or broker's own internal dispute resolution process doesn't resolve things, the next step is the Australian Financial Complaints Authority, AFCA — a free, independent external dispute resolution scheme. A referred complaint is generally given back to the firm first, with up to 30 days to resolve it directly, before a case manager becomes involved and the matter may move through negotiation, conciliation, or a formal decision. AFCA decisions can be binding on the firm and can include compensation for genuine loss. Time limits generally apply — roughly six years from the disputed decision, or two years from when the complaint first became aware of grounds to complain — so it's worth acting reasonably promptly rather than letting an unresolved dispute sit for years.

This article is general information only. It does not take into account your personal circumstances and is not a recommendation to buy, hold, cancel or switch any insurance product. Before engaging an insurance broker or agency, you can check whether the business holds a current Australian Financial Services Licence, or whether an individual is an authorised representative of one, on ASIC's professional registers at asic.gov.au — general insurance is generally not covered by moneysmart.gov.au's Financial Advisers Register, which applies to personal financial advice. If you have an unresolved dispute with an insurer or broker, the Australian Financial Complaints Authority (AFCA) provides a free external dispute resolution service at afca.org.au. Our directory lists insurance brokers, insurance agencies and life insurance specialists across Australia by area if you are ready to start comparing your options.

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