New Zealand’s insurance sector is grappling with a surge in disputes. The Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) has reported it recorded its highest number of formal investigations yet. In the year concluding June 30, 2025, the IFSO Scheme accepted 600 disputes, marking a notable 25% increase from the previous year and a consistent rise from just 285 cases in 2022.
Karen Stevens, the Insurance & Financial Services Ombudsman, confirmed the escalating trend. The IFSO Scheme received a total of 4,293 enquiries and complaints over the past year. While many initial issues are quickly resolved, Stevens pointed to a growing number of complaints that remain unsettled even after customers navigate the internal processes of their financial service providers, thereby escalating to formal investigations.
Several intertwined factors appear to be fuelling this increase. Stevens suggested that the ongoing cost-of-living crisis is a major contributor, as households face tighter budgets. Additionally, consumer expectations regarding what their insurance policies should cover are rising, particularly given the concurrent increases in insurance premiums across the board. Data indicates that house insurance premiums, for instance, saw nearly a 25% increase last year.
General insurance categories account for most disputes, making up 67% of all investigated cases. This includes common policies like house, contents, vehicle, and travel insurance. Health, life, or disability insurance disputes represented 29% of the caseload, with the remaining 4% relating to credit contracts and other financial services.
Within general insurance, house insurance continues to be the most common area for complaints, making up 24% of all disputes. Motor vehicle insurance follows at 19%, while travel insurance accounts for 18%.
A recent case highlighted by the IFSO Scheme highlighted the need for policyholders to understand their coverage. A client, referred to as Paul for anonymity, made a claim after his Range Rover was stolen and recovered, with the insurer paying over $37,000 for repairs. However, Paul later claimed additional issues, such as faulty air conditioning and water damage, arguing they were linked to the theft. Independent assessors found these issues were either pre-existing or unrelated.
“The IFSO Scheme can only consider whether the insurer had correctly applied the terms and conditions of the policy to the claim,” Stevens said, explaining why Paul’s complaint was not upheld. “There was no evidence that the issues were caused by the theft, and the insurer had met its obligations under the policy.”
Stevens stressed that “insurers rely on evidence.” She advised that consumers who disagree with a claim decision “must prove that there was damage missed, or that the settlement is unreasonable.”
What common hurdles do policyholders face when making claims? Share your insights in the comments below.
Unlock powerful dashboards and industry insights with IB+ Data Hub—your essential subscription for data-driven decision-making.
