Insurance Complaints NZ: IFSO Scheme & Dispute Process | QuoteHub

By QuoteHub Editorial Team · Updated 2025-12-26

Insurance Complaints NZ: How to Dispute a Claim Decision

Having an insurance claim declined or receiving a settlement you believe is unfair can be deeply frustrating. You have been paying premiums, sometimes for years, and when you finally need to rely on your cover, the answer is no. The good news is that New Zealand has a well-established complaints process that gives policyholders genuine recourse, and much of it is free.

This guide explains the full insurance complaints process in New Zealand, from your first phone call through to the IFSO Scheme and beyond. We cover what you can complain about, how to strengthen your case, the time limits you need to be aware of, and what the statistics say about complaint outcomes.

Why Insurance Complaints Happen

Before diving into the process, it helps to understand the most common reasons insurance disputes arise in New Zealand.

Declined claims. This is the most frequent trigger. An insurer may decline your claim because they believe an exclusion applies, the event is not covered under your policy wording, or there was a non-disclosure issue when you applied.

Partial settlements. The insurer accepts your claim but pays less than you expected, often due to policy limits, excess amounts, or disagreements over the value of what was lost or damaged.

Delays. Unreasonable delays in processing a claim or making a decision can also form the basis of a complaint.

Premium disputes. Unexpected premium increases, billing errors, or disagreements about policy terms at renewal.

Poor communication or service. Failure to respond to correspondence, provide clear reasons for decisions, or treat you fairly.

Non-disclosure allegations. The insurer argues that you failed to disclose relevant information when you took out the policy, and uses this to void or reduce your cover.

Understanding why your insurer has made the decision they have is the first step. Always request a written explanation with specific reference to the policy wording before escalating a complaint.

The Four-Step Complaints Process

New Zealand has a structured complaints process for insurance disputes. You should follow these steps in order, as each stage builds on the last.

Step 1: Contact Your Insurer Directly

Your first step should always be to raise the issue directly with your insurance company. Phone the customer service line and explain the problem clearly. Follow up in writing (email is fine) so there is a record of your complaint.

When making contact:

Be specific about what you are unhappy with
Reference your policy number, claim number, and any relevant dates
Ask for a written response that explains their decision and the policy clauses they are relying on
Keep copies of all correspondence

If you have a financial adviser, contact them as well. Authorised financial advisers deal with insurers regularly and can often resolve issues at this stage by clarifying information or presenting your case more effectively. If you do not have an adviser, QuoteHub can connect you with one at no cost to you.

Most insurers have a dedicated complaints team, and straightforward issues are often resolved at this level within a few business days.

Step 2: Internal Dispute Resolution (IDR)

If your initial contact does not resolve the matter, the next step is the insurer's formal internal dispute resolution process. All insurers operating in New Zealand are required to have an IDR process under the Financial Markets Conduct Act 2013.

To trigger IDR:

Put your complaint in writing and specifically state that you wish to raise a formal complaint
Outline the issue, the outcome you are seeking, and why you believe the decision is wrong
Include any supporting documents, such as medical reports, photos, receipts, or expert opinions

The insurer must acknowledge your complaint and work through their internal process. They are expected to provide a final response within a reasonable timeframe, typically within eight weeks.

Key point: You must go through IDR before escalating to the IFSO Scheme. The IFSO will generally not accept a complaint unless the insurer has had a chance to resolve it first, or has failed to respond within a reasonable time.

Step 3: The IFSO Scheme

If the insurer's internal process does not resolve your complaint, you can escalate it to the Insurance and Financial Services Ombudsman (IFSO) Scheme. This is the primary external dispute resolution body for insurance complaints in New Zealand.

The IFSO Scheme is:

Free for consumers. There is no cost to you at any stage.
Independent. The IFSO is not part of any insurance company and operates independently.
Binding on the insurer. If the IFSO makes a decision in your favour, the insurer must comply. Decisions are binding on the insurer up to $350,000.
Not binding on you. If you are unhappy with the IFSO's decision, you can still take the matter to court.

The IFSO Scheme covers complaints about most types of insurance, including life insurance, health insurance, income protection, trauma cover, contents, vehicle, and travel insurance. It also covers complaints about financial advisers.

Step 4: Legal Action

If you have been through the IFSO Scheme and remain unsatisfied, or if your claim exceeds the IFSO's jurisdiction, your final option is legal action. This could involve:

The Disputes Tribunal for claims up to $30,000
The District Court for claims between $30,000 and $350,000
The High Court for larger or more complex matters

Legal action should be considered a last resort. It is expensive, time-consuming, and uncertain. However, if your claim involves a significant sum and you believe the insurer has acted in bad faith, it may be worth seeking legal advice.

Before going to court, consider whether mediation might help. Some disputes can be resolved through private mediation, which is faster and cheaper than litigation.

How the IFSO Scheme Works in Detail

Because the IFSO Scheme is the most important step for most consumers, it is worth understanding the process in detail.

Who Can Complain

Any individual who holds or is covered by an insurance policy (or other financial service) can make a complaint. This includes beneficiaries of life insurance policies and people covered under group schemes.

What You Can Complain About

The IFSO Scheme can consider complaints about:

Declined claims
The amount of a claim settlement
Policy cancellations
Premium increases or billing issues
Delays in claim processing
Misleading or inadequate advice from a financial adviser
Non-disclosure disputes
Unfair policy terms or conditions

Time Limits

There are important time limits to be aware of:

You must lodge your complaint with the IFSO within two months of receiving the insurer's final response through their internal process
The complaint must relate to an event or decision that occurred within the past six years
If the insurer has not responded to your IDR complaint, you can go to the IFSO after a reasonable period (generally eight weeks)

Missing these deadlines can mean you lose access to this free service, so act promptly.

The IFSO Process

Once you lodge a complaint, the process typically follows these stages:

Initial assessment. The IFSO reviews whether the complaint falls within its jurisdiction and whether you have completed the IDR process.
Investigation. The IFSO gathers information from both you and the insurer. You may be asked to provide documents, a written statement, or other evidence.
Facilitated resolution. In many cases, the IFSO will work with both parties to try to reach an agreement. A significant number of complaints are settled at this stage.
Case manager recommendation. If the complaint cannot be resolved informally, a case manager will review all the evidence and make a recommendation.
Ombudsman decision. If either party disagrees with the case manager's recommendation, the complaint can be escalated to the Ombudsman for a formal, binding decision.

The entire process typically takes between two and six months, depending on the complexity of the complaint and how quickly both parties provide information.

What Happens if You Win

If the IFSO finds in your favour, it can require the insurer to:

Pay your claim (up to $350,000)
Reinstate your policy
Compensate you for distress, inconvenience, or financial loss caused by the insurer's actions
Change their decision or processes

The insurer is legally bound by the IFSO's decision. If the insurer fails to comply, the IFSO can refer the matter to the relevant regulatory authority.

Common Reasons Insurance Claims Are Declined

Understanding why claims are declined can help you avoid pitfalls and strengthen any future complaint.

Reason	What It Means
Non-disclosure	You did not disclose relevant information (such as a pre-existing medical condition) when you applied for the policy
Exclusion applies	The event you are claiming for is specifically excluded in your policy wording
Policy lapsed	Your premiums were not paid and the policy had lapsed before the event occurred
Waiting period	You made a claim during a stand-down or waiting period at the start of the policy
Event not covered	The type of loss or event simply is not covered by your policy type
Late notification	You did not notify the insurer within the required timeframe
Misrepresentation	The insurer alleges that information you provided was inaccurate or misleading

If your claim has been declined for any of these reasons, request the insurer's written reasoning and check it against the actual policy wording. Insurers do sometimes get it wrong, and an independent review by an adviser or the IFSO may reach a different conclusion.

How to Strengthen Your Complaint

If you decide to pursue a complaint, the following steps can improve your chances of a successful outcome.

Get everything in writing. Phone calls are useful for initial contact, but follow up every conversation with a written summary. This creates a paper trail that is invaluable if the complaint escalates.

Read your policy wording carefully. The insurer's decision must be based on the actual terms and conditions of your policy. If you believe their interpretation is wrong, highlight the specific clauses and explain your reasoning.

Gather supporting evidence. Medical reports, photos, receipts, witness statements, expert opinions, and any other documentation that supports your position.

Be factual and specific. Avoid emotional language. Focus on the facts, the relevant policy clauses, and why you believe the decision is incorrect. The IFSO responds to evidence, not frustration.

Seek professional help. An authorised financial adviser can review your policy, assess the insurer's decision, and help you present your case. Many advisers will assist with complaints as part of their ongoing service.

Keep to deadlines. As noted above, missing the IFSO's time limits can prevent your complaint from being heard. Act promptly at every stage.

Know the insurer's obligations. Under the Fair Insurance Code (administered by the Insurance Council of New Zealand), insurers must handle claims and complaints fairly, promptly, and transparently. If you believe the insurer has breached the Code, raise this in your complaint.

The FMA's Role in Insurance Regulation

The Financial Markets Authority (FMA) is New Zealand's financial regulator. While the FMA does not resolve individual insurance complaints (that is the IFSO's role), it plays an important part in the broader landscape.

The FMA:

Licences and monitors financial advice providers and their authorised financial advisers
Sets conduct standards for insurers and financial advisers under the Financial Markets Conduct Act 2013
Can take enforcement action against companies that breach financial markets legislation
Publishes guidance on fair conduct, disclosure obligations, and consumer rights

If you believe an insurer or adviser has engaged in systemic misconduct, misleading conduct, or breached their regulatory obligations, you can report this to the FMA directly. The FMA will not intervene in your individual complaint, but your report may contribute to regulatory action that benefits all consumers.

Complaint Outcomes: What the Numbers Say

The IFSO publishes annual data on complaint outcomes, and the numbers are worth knowing.

In recent reporting periods, approximately 40 to 50 percent of complaints that reach investigation stage result in some form of resolution in the complainant's favour. This may involve the insurer reversing their decision, increasing a settlement, or reaching a negotiated outcome.

A significant proportion of complaints are resolved at the facilitated resolution stage, meaning the IFSO helps both parties reach an agreement before a formal decision is needed.

These numbers suggest that pursuing a complaint through the IFSO Scheme is worthwhile if you have a genuine basis for disputing the insurer's decision. The process is free, independent, and produces meaningful results for many complainants.

When to Involve a Financial Adviser

An authorised financial adviser can be valuable at every stage of the complaints process, not just when setting up your insurance.

Before lodging a complaint: An adviser can review the insurer's decision and tell you whether it appears correct or whether there are grounds to challenge it
During IDR: An adviser can help you draft your formal complaint and present your case clearly
At the IFSO stage: An adviser can provide supporting information and context about why the policy was set up the way it was

If you do not currently have an adviser, or if you want a second opinion on your situation, QuoteHub can connect you with an authorised adviser who can review your case.

Frequently Asked Questions

How long does the IFSO Scheme process take?

Most complaints are resolved within two to six months, depending on the complexity of the issue and how quickly both parties provide information. Straightforward matters that settle at the facilitated resolution stage can be resolved faster.

Does the IFSO Scheme cost anything?

No. The IFSO Scheme is completely free for consumers. Insurers pay levies to fund the service. There is no fee for lodging a complaint, regardless of the outcome.

Can I complain about my financial adviser through the IFSO Scheme?

Yes. The IFSO Scheme covers complaints about authorised financial advisers, including allegations of poor advice, failure to disclose information, or negligence.

What if my complaint is worth more than $350,000?

The IFSO can make binding decisions up to $350,000. If your dispute involves a larger amount, you may need to pursue the matter through the courts. However, it is still worth contacting the IFSO, as they may be able to facilitate a resolution even for larger amounts.

Can I still go to court after using the IFSO Scheme?

Yes. The IFSO's decision is binding on the insurer but not on you. If you are dissatisfied with the outcome, you retain the right to take legal action.

What is the difference between the IFSO and the FMA?

The IFSO resolves individual complaints between consumers and insurers or financial advisers. The FMA is the financial regulator that oversees the industry, sets conduct standards, and takes enforcement action against companies that breach the law. If you have an individual complaint, go to the IFSO. If you believe there is systemic misconduct, report it to the FMA.

Do I need a lawyer to make an IFSO complaint?

No. The IFSO process is designed to be accessible without legal representation. You can lodge and manage your complaint yourself, or have your financial adviser assist you. However, if the matter is particularly complex or involves a large sum, legal advice may be helpful.

Key Takeaways

Always start by contacting your insurer directly and requesting a written explanation of their decision
Use the insurer's internal dispute resolution process before escalating
The IFSO Scheme is free, independent, and binding on insurers up to $350,000
Act within the time limits: lodge your IFSO complaint within two months of the insurer's final response
Gather evidence, be specific, and keep everything in writing
An authorised financial adviser can help at every stage of the process
If you want to review your existing insurance or understand how the claims process works, having professional support can prevent disputes from arising in the first place

Disclaimer: This article is general information only and does not constitute financial advice. QuoteHub (FSP 712931) connects New Zealanders with authorised financial advisers. For personalised advice about your insurance or a complaint, please speak with a qualified adviser.

References

Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance.