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Have you had an insurance claim either knocked back or reduced by your insurer and not been happy
with their decision ?

If so, what can you do about it ?

In this series SMD Lawyers will explain how to dispute an insurer’s decision and explore what legal
reasons you may have to do so.

A good starting point is to understand each general insurer’s claims management and complaint
handling obligations as set out in the 2020 General Insurance Code of Practice published by the
Insurance Council of Australia and available online at

To find out whether your insurer has agreed to comply with the provisions of the Code go to of practice/Code Subscribers.

The Code does not cover all types of insurance (eg: statutory personal injury claims) but does apply
to all ‘general insurance products’ and requires the named insurers to comply with the terms of the

The most common types of policy covered by the Code include:

• Motor vehicle insurance;
• Home building and/or contents insurance;
• Sickness or accident insurance;
• Travel insurance; and
• Personal and domestic property insurance.

The overriding principals established by the Code which are required to be demonstrated by an
insurer are to:

• provide value, transparency and fairness in its products and services;
• promote trust, integrity and respect by treating the community with respect, dignity and
transparency; and
• resolve any concerns and work towards preventing future concerns by listening and seeking
to resolve concerns in an objective, truthful and timely manner.

Part 8 of the Code sets out the requirements to be followed by an insurer when managing your

Part 11 addresses the complaint making process the insurer must follow.
There are 3 separate steps you can take in response to the decision by an insurer to either refuse or
reduce your claim.

The First Step – IDR

In general terms, if you are not satisfied with the decision by the insurer to refuse or reduce your
claim you can request it conduct an Internal Dispute Review (IDR) of the decision.

Each general insurance Policy Disclosure Statement (PDS) contains specific terms outlining the
insurer’s IDR process which reflects Part 8 of the Code.

The insurer must comply with your IDR request and the claim is required to be reviewed by another
representative of the insurer with the ‘appropriate authority, knowledge and experience’.

The insurer is then required to make its IDR decision within 30 days after receiving your complaint
and if it fails to do so, is required to explain the delay and advise you of your right to refer it to the
Australian Financial Complaints Authority (AFCA) for failing to comply with the 30 day timeframe.

Most importantly, clause 151 of the Code requires the insurer to provide you with a copy of all the
information it relied upon when making its decision about your complaint within 10 business days of
you asking for it.

In accordance with clauses 161 and 162 that information includes:

• all the documents and information it relied upon to reach its’ decision;
• copies of all service supplier and external expert reports;
• copies of any recordings, statements etc. the insurer obtained from you during the claims
process; and
• a valid explanation if it refuses to provide any document or information (eg: a legal

In our experience you will need to provide additional evidence and/or legal arguments to the insurer
to convince it to reverse its’ original decision.

Simply complaining that the insurer’s decision as wrong is unlikely to result in any change being
made to its’ decision.

The Second Step – AFCA

Each insurer which has agreed to be bound by the terms of the General Insurance Code of Practice
must also participate in an external dispute resolution scheme administered by AFCA.

If the insurer’s IDR decision upholds its’ earlier refusal or reduction of your claim, you are entitled to
refer your complaint to AFCA.

AFCA is an independent body created to assist consumers and small businesses to make and resolve
complaints against insurers.

Complaints can be completed online at, submitted via email to or lodged by telephone to 1800 931 678.

AFCA will appoint a case manager for your Complaint who will manage the AFCA process.

There is no fee for lodging an AFCA Complaint.
There is no financial risk to you even if you lose because the insurer cannot seek recovery of any
money from you.

You are not bound to accept the decision by AFCA if it upholds the insurer’s refusal of your claim.

Rather, you may pursue any legal rights you may have arising from the refusal against the insurer in
civil proceedings in a Court of competent jurisdiction.

However, if AFCA’s decision overrules the insurer’s refusal, the insurer is bound by that decision and
cannot take any further action to appeal it.

The Third Step – litigation

The final option for a disgruntled consumer who has not received their desired outcome from AFCA
is to commence proceedings in a Court of competent jurisdiction against the insurer seeking
damages for breach of contract.

The appropriate Court will depend on the state or territory in which a person resides and the loss
and damage they have suffered.

For example:
• if you reside in Queensland and your claim is for less than $150,000.00 it can be commenced
in the Magistrates Court jurisdiction;
• if you reside in New South Wales and your claim is for less than $100,00.00 it can be
commenced in the Local Court jurisdiction;
• if you reside in Victoria and your claim is for less than $100,000.00 it can be commenced in
the Magistrates Court jurisdiction.

Before commencing any legal proceedings we strongly recommend obtaining expert legal advice
regarding your prospects as the unsuccessful party in civil litigation is often required to pay the
successful party’s legal costs, which can be expensive.

At SMD Lawyers our Queensland director, Michael Green, has practiced almost exclusively in the
insurance arena for more than 30 years during which time he has drafted numerous Product
Disclosure Statements for a variety of Australian insurers while also acting for many individuals and
corporations whose claims have been refused or reduced during the IDR process. In reality few
lawyers understand how to interpret and argue the terms of an insurance policy like Michael.

He can assist you from drafting your IDR and AFCA submissions to representing you in any civil
litigation throughout Australia.

Michael and his insurance team never shy away from taking on an insurer when they believe it has
made the wrong or an ill-informed decision to the detriment of our clients.

Next time…

In our future posts we will provide some insights into:

• the common reasons why an insurer may decide to refuse or reduce a claim;
• what mistakes your insurer can make when deciding to refuse or reduce your claim; and
• a number of case examples in which we have succeeded in identified those mistakes and
convincing the insurer to accept our client’s claim.

If your insurance claim has been refused or reduced and you do not believe the decision was either
justified or fair, please contact SMD Lawyers on 07-3218 4600 or email us at for a confidential initial consultation