Insurance Claim Denied in Australia? Your AFCA Rights Explained

An insurance claim denied Australia doesn't mean the end. Australia's system gives you powerful protections, including access to a free ombudsman that can order insurers to pay hundreds of thousands of dollars. This guide walks you through every step.

Whether it's life, health, travel, car, or home insurance, the process is the same. The Australian Financial Complaints Authority (AFCA) exists specifically to help people like you. They've resolved over 1 million complaints and awarded billions in compensation.

Here's how to use the system.

Your Rights When Your Claim Is Denied in Australia

Australian law is clear: you have rights.

Australian Consumer Law (ACL): Insurers must be fair and honest. They can't hide behind complex wording to avoid paying legitimate claims.

Insurance Contracts Act: Every insurance contract must be written clearly. Any ambiguity is interpreted against the insurer.

IDR and EDR: All insurers must have an Internal Dispute Resolution (IDR) process and are backed by an External Dispute Resolution (EDR) provider—usually AFCA.

AFCA's Power: AFCA can order insurers to pay up to AUD 5,110,000 in compensation. They're binding on the insurer. You don't have to accept their decision, but the insurer must.

Timeliness Rules: Insurers have strict deadlines to respond to your complaints. Missing these is itself a breach.

The system is designed to protect you from being crushed by insurance bureaucracy. Use it.

Step 1: Understand Your Denial

Before anything else, you need clarity. Your insurer must give you a detailed, written reason for the denial.

This reason must:

• Quote the specific policy clause they rely on
• Explain how your claim doesn't meet that clause
• Reference the evidence they reviewed
• Show they considered your full circumstances

If the reason is vague or doesn't quote policy wording, that's already a red flag. Many denials fall apart because the insurer can't actually justify the decision in writing.

Request a detailed explanation if you don't have one. In writing. Keep the response.

Step 2: File Your Internal Dispute Resolution (IDR) Complaint

This is your first formal step. Every insurer in Australia must have an IDR process, and they must follow strict rules.

Timeline: IDR complaints must be resolved within 30 days (21 days for financial hardship claims).

How to Lodge:

1. Contact the insurer's IDR team (check your policy or their website for contact details)
2. In writing, state: "I wish to lodge a formal IDR complaint"
3. Include: your policy number, claim number, the date of the denial, and why you believe the denial was wrong
4. Attach evidence: medical reports, doctor's letters, policy wording highlighting relevant clauses
5. Send by registered mail or email with read receipt

What to Say in Your IDR Letter:

• "I am lodging a formal IDR complaint under the Insurance Contracts Act"
• Clearly state what you're complaining about
• Explain why you believe the insurer was wrong (policy wording, medical evidence, breach of ACL)
• State the outcome you want (approval of the claim and payment)
• Be factual and professional

Don't:

• Be emotional or angry
• Make threats
• Include irrelevant information
• Accept a verbal response—insist on written

What Happens Next:

• The insurer acknowledges receipt (usually within 1-2 business days)
• They investigate (must take no more than 30 days)
• They respond with an IDR outcome letter

The outcome letter will either:

• Approve your claim (success!)
• Uphold the denial (with detailed explanation)
• Offer a partial settlement

If they uphold the denial, they must tell you about your EDR (AFCA) rights in this letter. This is mandatory.

Step 3: Escalate to AFCA (External Dispute Resolution)

If the insurer rejects your IDR complaint (or doesn't respond within 30 days), you can escalate to AFCA for free.

What is AFCA? The Australian Financial Complaints Authority is the independent ombudsman for financial services complaints. They're not funded by insurers, they're not biased, and they have real power to order compensation.

AFCA's Authority:

• Can award up to AUD 5,110,000 in compensation
• Award is binding on the insurer
• Can order the insurer to pay interest and compensation for inconvenience
• You don't have to accept AFCA's decision (though 99% of people do)

How to Lodge with AFCA:

1. Visit afca.org.au
2. Complete the complaint form or call 1800 931 678
3. Provide: your details, insurer name, policy number, claim number, what happened, why you disagree with the IDR outcome
4. Attach: IDR outcome letter, denial letter, medical evidence, policy document, any other relevant documents
5. Submit

No fee. No lawyers required. No time pressure if you're struggling.

What to Expect:

• AFCA acknowledges your complaint
• They contact the insurer for their response
• AFCA investigates independently
• They issue a "Statement of Facts" showing what they've found
• They issue a decision (usually finding in your favour, the insurer's favour, or a recommendation for settlement)
• If the insurer disagrees with AFCA's decision, AFCA will still rule and the ruling is binding on the insurer

Timeline:

• Most cases resolve within 6 months
• Complex cases can take longer
• You get updates throughout

Step 4: Health Insurance and PHIO (Private Health Ombudsman)

If your claim is for private health insurance, there's an additional layer: the Private Health Ombudsman (PHIO).

PHIO's Role:

• Handles private health insurance disputes
• Can order refunds and compensation
• Acts independently

You can file with both AFCA and PHIO simultaneously. PHIO may actually be faster for health-specific claims.

Contact PHIO at 1800 640 695 or via privhealthombudsman.org.au.

Common Denial Reasons in Australia—And How to Fight Them

"Pre-existing condition": The insurer says your condition existed before the waiting period. Counter with: doctor's letter confirming when the condition started, medical records proving the timeline, policy wording about what counts as pre-existing.

"Not medically necessary": The insurer claims the treatment wasn't clinically justified. Respond with: doctor's letter explaining medical necessity, clinical guidelines (NHMRC, AMA), evidence that similar patients receive the same treatment.

"Not covered under the policy": The insurer says the type of treatment is excluded. Fight back with: policy wording that supports coverage, medical evidence showing the treatment was necessary and related to a covered condition, comparison to industry standards.

"Breach of duty of disclosure": The insurer says you failed to disclose health information. This is a complex one. Counter with: evidence that you disclosed what you were asked (check your application), evidence that the insurer didn't ask about the condition, evidence that the condition wouldn't have changed the premium or acceptance.

"Claim form incomplete": The insurer says you didn't provide required documentation. Ask exactly what's missing, then provide it. If they're vague, that's a weak position for them.

Evidence That Wins AFCA Cases

Your evidence pack is your strength. AFCA listens to proof, not assertions.

Medical Evidence:

• Doctor's letter addressing the specific denial reason
• Medical records and test results
• Clinical guidelines (NHMRC, AMA, specialist college) supporting the treatment
• Evidence the condition wasn't pre-existing (medical history)

Policy Analysis:

• Full policy wording with relevant clauses highlighted
• Clear reading that contradicts the insurer's interpretation
• Communications from the insurer (emails, agent notes) about what was covered
• Evidence of how the insurer has treated similar claims

Communication Records:

• Emails or letters to the insurer
• Your complete claim form and all documentation you submitted
• Any follow-up communication
• Proof of timeline (when you notified the insurer, when they denied, etc.)

Expert Opinion:

• Letter from your doctor supporting medical necessity
• Clinical precedent showing similar treatments are approved
• Evidence the insurer's reasoning contradicts medical standards

The stronger your evidence pack, the clearer AFCA's decision will be.

What If You're in Financial Hardship?

If the insurance issue is causing you severe financial hardship, tell AFCA. They have:

• Faster processes (21-day IDR for hardship claims)
• More flexible timelines
• Special consideration for your circumstances

Using ACL (Australian Consumer Law) in Your Complaint

The Australian Consumer Law protects you in two ways:

Misleading and Deceptive Conduct: If the insurer misled you about what was covered (e.g., an agent said the condition was covered when it wasn't), that's a breach of ACL.

Unconscionable Conduct: If the insurer's denial is harsh, unfair, or unreasonable given your circumstances, it may be unconscionable under ACL.

In your IDR and AFCA complaints, reference the ACL. It strengthens your case.

Timeline for Appeal in Australia

• IDR response: 30 days
• AFCA investigation: 2-6 months
• Total: 3-7 months in most cases

During this time:

• Don't pay disputed medical bills if you can avoid it
• Keep all documentation organized
• Respond to any requests for information within 7 days

Writing Your Appeal

Your complaint letters to both the insurer and AFCA need to be clear, evidence-backed, and professional.

Start with the denial reason. Then show (with evidence) why it's wrong. Then ask for the outcome you want.

ClaimBack can analyse your case and write your appeal letter in minutes — Start Free →

We'll analyze your denial, your policy, your medical records, and Australian law, then generate a professional letter tailored to IDR and AFCA requirements. You review, send, and watch your insurer take you seriously.

Pre-Appeal Checklist

• I have my denial letter and IDR outcome letter
• I understand the exact reason for the denial
• I have gathered all medical evidence
• I have my full policy document
• I have highlighted policy wording that supports my position
• I have contacted AFCA (1800 931 678) with any questions
• I have prepared a clear, evidence-backed complaint
• I know the 30-day IDR deadline
• I have proof of how I'll send the complaint

AFCA exists for you. Use it.

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Disclaimer: ClaimBack provides AI-generated appeal assistance for informational purposes only. ClaimBack is not a law firm and does not provide legal advice. Always review your appeal letter before sending and consider professional advice for complex or high-value claims. Regulatory processes vary — always verify current procedures with your insurer or regulator.

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