Fine print dominates travel insurance complaints

Complaints about travel insurance fine print are dominating the workload of a new consumer complaints body, pushing it to a 400% increase in cases investigated.

Financial Service Complaints was set up under the Financial Service Providers Act to investigate and resolve consumer complaints made against any of its 5000 participants which include financial advisers, finance companies, insurance companies, credit unions, trustee companies and card issuers.

The body received 115 cases for investigation in the year to June 30, its annual report reveals, 47 of which involved insurers, and of those 30 cases related to declined travel insurance claims.

The two most common complaints related to policy exclusions for pre-existing medical conditions and baggage or items "lost while unsupervised".

FSC chief executive Susan Taylor warns consumers to take care when buying travel insurance or relying on “free” policies that are provided with credit cards and to make sure they fully understand exactly what they are covered for.

“Some policies impose age limits and time limits, which can severely restrict the extent of cover provided under a travel insurance policy."

Pre-existing medical insurance policy exclusions include symptoms that have not yet been diagnosed as a particular condition, recurring conditions and managed conditions such as asthma, even if a doctor has declared a person medically fit to travel, she says.

Intentionally leaving a handbag under a towel at the beach, or unintentionally dropping a wallet in a taxi or leaving a camera at a café “tip-toe” the fine line between being covered and not being covered under some policies.

Overall, financial service providers were doing a good job of resolving complaints directly with their customers, Ms Taylor says.

But there was still very low consumer awareness of the new regulations requiring all financial service providers to belong to an independent dispute resolution scheme.

Of the 17 complaints FSC investigated against lenders, maladministration – including reckless lending, failing to properly disclose fees and taking recovery action unfairly – was the most common issue.

FSC completed 92 of its 115 complaint investigations. At 41%, most of those were settled by negotiation and 29% were withdrawn after FSC issued a preliminary view the case was unlikely to be upheld.

Average time taken to investigate a complaint was 64 days and the FSC’s longest investigation took about nine months.

Compensation of $251,410.21 was either negotiated or recommended by FSC to be paid to consumers.