IAG & AFCA: How Property Damage Disputes Get Resolved

The Australian Financial Complaints Authority (AFCA) is the independent, government-authorised external dispute resolution (EDR) scheme for financial services in Australia. It replaced the Financial Ombudsman Service, the Credit and Investments Ombudsman, and the Superannuation Complaints Tribunal in 2018.

For home and contents policyholders, AFCA provides a free, binding alternative to court action when an insurer has declined a claim, underpaid a settlement, unreasonably delayed handling, or otherwise acted contrary to its obligations. AFCA decisions are legally binding on the insurer — not on the complainant, who may still pursue other avenues if they choose.

• Monetary limits: For general insurance claims, AFCA can award up to $1,085,000 in compensation for the claim itself (as of AFCA's published limits). Additionally, AFCA can order compensation for non-financial loss (such as stress, anxiety and inconvenience directly caused by the insurer's misconduct) of up to $5,500.
• No cost to complainants: AFCA is free for consumers and small businesses. Insurers pay a fee for each complaint lodged, which incentivises efficient internal dispute resolution.
• Who must participate: All Australian Financial Services licence holders — including every major insurer — are required by law to be AFCA members and to comply with AFCA determinations.

IAG (Insurance Australia Group) operates several well-known brands in Australia including NRMA Insurance, CGU, SGIO, and SGIC. As a major insurer, IAG is subject to AFCA's jurisdiction and must comply with any determination AFCA makes.

Property damage disputes — including disputes over storm damage, water damage, fire damage, and flood events — make up a significant portion of AFCA's general insurance caseload. Understanding how AFCA approaches these cases gives you a realistic picture of what to expect.

• Internal dispute resolution first: Before lodging an AFCA complaint, you must give your insurer an opportunity to resolve the dispute through its own Internal Dispute Resolution (IDR) process. Under the General Insurance Code of Practice, the insurer must respond to your IDR complaint within 15 business days (or 30 business days for complaints involving vulnerable customers or complex matters).
• Lodging with AFCA: If you are unsatisfied with the IDR outcome — or if the insurer does not respond within the required timeframe — you may lodge a complaint with AFCA. You generally have two years from the date you received the IDR response to lodge.
• Negotiation and conciliation: AFCA first attempts to resolve disputes through negotiation between the parties. Many property damage cases settle at this stage without a formal determination.
• Preliminary assessment: If negotiation fails, AFCA may issue a preliminary assessment — a non-binding view of the likely outcome. Either party can ask for the matter to proceed to a final determination.
• Final determination: A formal written decision by an AFCA decision-maker or panel. If you accept the determination, it is binding on the insurer. The insurer must comply within the timeframe AFCA specifies.

AFCA applies the law (including the Insurance Contracts Act 1984 and common law), the terms of your policy, industry codes (including the General Insurance Code of Practice), and what is fair and reasonable in all the circumstances.

When AFCA determines in a complainant's favour, it has broad powers to remedy the situation. Understanding the range of available remedies helps you articulate what you are seeking in your own complaint.

• Pay the outstanding claim: AFCA can direct the insurer to pay the full amount owed under the policy, including amounts that were underpaid, wrongly withheld, or delayed without justification.
• Cover consequential losses: Where the insurer's conduct caused additional losses — for example, where delays forced you to pay for temporary accommodation for an extended period, or where failure to act promptly allowed secondary damage such as mould to develop — AFCA can order the insurer to compensate for those consequential losses.
• Rectify poor claims handling: Where the insurer mishandled the claim — appointed a biased assessor, failed to consider your evidence, or communicated in a misleading or deceptive way — AFCA can direct the insurer to re-assess the claim and correct the process.
• Non-financial loss compensation: AFCA can award up to $5,500 for non-financial loss caused directly by the insurer's conduct, such as anxiety, distress, or significant inconvenience attributable to unreasonable delays or poor communication.
• Interest on delayed payments: Where funds were withheld for an unreasonably long time, AFCA may direct the insurer to pay interest on the outstanding amount.

These remedies apply equally to all AFCA member insurers — including IAG's brands. A determination is not a penalty, but it is legally binding on the insurer. Non-compliance can result in referral to ASIC.

Strong documentation is the single most important factor in a successful AFCA complaint. AFCA decision-makers assess the evidence on its merits — the strength of your documented case often determines whether the decision goes in your favour.

• Compile all written correspondence: Gather every email, letter, SMS and internal notes reference from your interactions with the insurer. AFCA will rely on this record to assess whether the insurer communicated clearly and acted within required timeframes.
• Keep a timeline of events: Document every significant date — when the event occurred, when you lodged the claim, when the assessor visited, when you received decisions, and when you escalated to IDR. A clear timeline demonstrates delays that may constitute a breach of the insurer's obligations.
• Obtain an independent assessment: If the insurer's assessor produced a report you dispute, commission an independent scope of works or expert report. AFCA gives significant weight to independent, expert evidence.
• Know your policy: Read your Product Disclosure Statement (PDS) carefully and highlight the provisions you believe the insurer has breached. AFCA determines disputes against the terms of your actual policy as well as applicable law.
• Quantify your losses: Provide a detailed, itemised list of your claimed losses — repair costs, temporary accommodation, contents, and any consequential losses. Unsupported figures are given less weight than itemised, evidenced claims.

You can lodge an AFCA complaint at afca.org.au. AFCA provides a free online complaint form and a dedicated phone line for consumers who need assistance.

Whether your dispute is at the IDR stage or before AFCA, professional documentation from a qualified restoration contractor is often the evidence that makes the difference between a resolved claim and a protracted dispute.

• Independent scope of works: Our IICRC-certified contractors produce detailed, itemised scopes of works that reflect the true extent of damage and the cost of restoring your property to pre-loss condition. These documents provide an independent counterpoint to insurer-appointed assessments.
• Moisture mapping and thermal imaging: Objective, instrument-based evidence of hidden water damage is compelling in any dispute about the scope of damage. Our contractors document moisture readings daily and include thermal images in the final report.
• Photographic evidence packages: Timestamped photographs taken at each stage of the job — initial assessment, demolition, drying, and completion — create an unambiguous visual record of the damage and the restoration process.
• No-obligation assessment: You can request a documented assessment through the Disaster Recovery platform at no obligation. The resulting report is yours to use in any claims or dispute process.