Insurance Claim Denied in New Zealand: IFSO Appeals Process Guide

Insurance Claim Denied in New Zealand: Your Rights and the IFSO Process

New Zealand policyholders whose insurance claims have been denied have access to one of the most accessible and consumer-friendly dispute resolution systems in the Asia-Pacific region: the Insurance & Financial Services Ombudsman (IFSO) scheme. The service is free, independent, and has real power to compel insurers to pay legitimate claims.

This guide covers everything you need to know about challenging a denied insurance claim in New Zealand — from the first steps after receiving a denial to filing with IFSO and beyond.

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New Zealand's Insurance Regulatory Framework

Reserve Bank of New Zealand (RBNZ)

The Reserve Bank of New Zealand (Te Pūtea Matua) is the prudential regulator for insurers in New Zealand under the Insurance (Prudential Supervision) Act 2010. RBNZ ensures that insurers are financially sound — it does not handle individual consumer complaints.

Financial Markets Authority (FMA)

The Financial Markets Authority (FMA) regulates financial markets conduct and has an oversight role in insurance conduct under the Financial Markets Conduct Act 2013 and the Financial Services Legislation Amendment Act 2019 (which came into full effect in 2020).

Insurance & Financial Services Ombudsman (IFSO)

The IFSO scheme is New Zealand's primary free dispute resolution service for insurance complaints. All licensed insurers and financial service providers in New Zealand are required to be members of an approved dispute resolution scheme — and most use IFSO.

IFSO can:

• Investigate and make recommendations on insurance disputes
• Award compensation to policyholders where decisions are wrong
• Issue binding decisions up to $350,000 (and recommend awards beyond this in some cases)
• The service is completely free for consumers

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Common Insurance Disputes in New Zealand

New Zealand's insurance market includes life insurance, health insurance, income protection, house and contents, motor vehicle, and travel insurance. Common denial reasons:

• House and contents insurance: Weather damage denied as wear and tear; gradual damage exclusions applied broadly; earthquake-related claims disputes (particularly post-Canterbury earthquakes)
• Health/medical insurance: Pre-existing condition exclusions; treatment deemed not medically necessary; exclusions applied to chronic conditions
• Life and income protection: Disability definition disputes; non-disclosure issues
• Travel insurance: Pre-existing condition denials; failure to contact assistance line
• Motor vehicle: Driver exclusions; use of vehicle outside policy terms

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Step 1: Request the Written Denial With Specific Policy Grounds

Immediately after receiving your denial:

• Request a formal written rejection letter citing the specific policy clause and the exact reason for denial
• Request a copy of your complete policy document if you don't have one
• Ask for the insurer's internal complaints process details

Under New Zealand's consumer protection framework and the insurers' obligations as financial services providers, they must provide clear, written grounds for denial.

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Step 2: File a Formal Internal Complaint With Your Insurer

Before IFSO will accept your complaint, you must have attempted to resolve it internally with the insurer. File a formal written complaint to:

• The insurer's Complaints Department or complaints manager
• Not just your broker or agent — escalate to the company's formal complaints process

Under the Financial Service Providers (Registration and Dispute Resolution) Act 2008, insurers must have an internal complaints process and respond to formal complaints within a reasonable period — typically 20 working days.

Include in your complaint:

• Your policy number and claim reference
• Your grounds for disputing the denial, with specific policy clause references
• All supporting evidence (medical reports, expert assessments, photographs, etc.)
• A specific statement of what resolution you are seeking

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Step 3: File With IFSO (After Internal Complaint Process)

If the insurer:

• Doesn't respond within 20 working days
• Provides a response you disagree with (a "final decision" or "deadlock" letter)
• Hasn't resolved the complaint after a reasonable period

...you can escalate to IFSO.

IFSO Contact Details:

• Website: ifso.nz
• Phone: 0800 888 202 (free within NZ)
• Email: info@ifso.nz
• Postal: IFSO Scheme, Level 2, Shamrock House, 79 Boulcott Street, Wellington 6011

Time limit: You must file your IFSO complaint within 2 years of the matter first arising (generally 2 years from when you first became aware of the problem, or when the insurer's decision was made). Don't delay.

The process is free — there is no cost to file a complaint with IFSO.

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The IFSO Investigation Process

Once IFSO accepts your complaint:

1. Preliminary review (approximately 2–4 weeks) IFSO assesses whether the complaint falls within their terms of reference and whether the required internal complaint process has been completed.

2. Investigation IFSO obtains all relevant documents from both you and the insurer. They may contact you for additional information.

3. Conciliation IFSO typically attempts to facilitate a settlement between you and the insurer before making a formal decision. Many complaints are resolved at this stage.

4. Recommendation or Decision If conciliation fails, IFSO issues a formal recommendation or decision. Their recommendations are typically binding on the insurer if you accept them. If you don't accept the recommendation, you retain the right to pursue other remedies (including court action).

Timeline: Most IFSO investigations are resolved within 3–6 months. Complex cases may take longer.

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What IFSO Can and Cannot Do

IFSO CAN:

• Uphold your complaint and order the insurer to pay your claim
• Award compensation for the denied claim amount
• Award additional compensation for distress, inconvenience, or loss caused by the insurer's conduct
• Order the insurer to change its decision on how a policy clause is applied
• Make awards up to $350,000

IFSO CANNOT:

• Handle complaints about premium pricing or underwriting decisions (except where required by law to be offered coverage)
• Investigate complaints about financial hardship arrangements
• Handle matters that are already before the courts
• Compel outcomes beyond their terms of reference

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New Zealand-Specific Legal Protections

Fair Insurance Code

The Insurance Council of New Zealand's Fair Insurance Code establishes standards of conduct for member insurers, including:

• Fair and timely claims handling
• Clear communication of policy terms and exclusions
• A requirement to tell customers about their right to complain

If your insurer is a member of the Insurance Council and has violated the Fair Insurance Code, you can reference this in your complaint.

Contract and Commercial Law Act 2017

Under New Zealand contract law, ambiguous policy terms are interpreted against the insurer (contra proferentem). Courts and IFSO apply this principle.

Consumer Guarantees Act 1993

For insurance products that qualify as "services" under consumer law, the Consumer Guarantees Act may provide additional protection. Consult a consumer law advisor if you believe this applies.

Privacy Act 2020

You have the right to access all information the insurer holds about your claim, including internal communications and medical reviewers' reports. Submit a Privacy Act request if you suspect the insurer made a decision based on information you haven't seen.

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Post-Canterbury Earthquake Claims: Special Context

New Zealand has a unique earthquake claims landscape following the 2010-2011 Canterbury earthquakes and ongoing seismic events. Thousands of property insurance claims remain in dispute.

Key resources for earthquake-related claims:

• Earthquake Commission (EQC / Toka Tū Ake): The government natural disaster insurer for residential property. EQC disputes go to IFSO.
• EQC/Private Insurer boundary disputes: Complex cases where EQC and private insurance overlap
• Canterbury Earthquakes Insurance Tribunal (CEIT): Established specifically for Canterbury earthquake claims disputes — an alternative to IFSO for many property cases

If your property insurance dispute involves earthquake damage in Canterbury or anywhere in New Zealand, check whether CEIT or IFSO is the more appropriate forum.

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Common Mistakes in New Zealand Insurance Appeals

1. Not completing the internal complaint process first. IFSO requires this — they will return your complaint if you haven't tried internally first.

2. Missing the 2-year IFSO deadline. Two years passes faster than you think, especially if you are dealing with health issues alongside the claim dispute.

3. Not getting supporting expert evidence. For property damage disputes, an independent building inspector's or engineer's report is essential. For health claims, a specialist report is critical.

4. Accepting a low settlement offer to resolve the stress. Once you accept a full and final settlement, you typically cannot re-open the claim. Get independent advice before accepting.

5. Not requesting all information held by the insurer. A Privacy Act request can reveal how the insurer assessed your claim, what internal advice they received, and whether there were errors in their process.

6. Not checking the Fair Insurance Code. If the insurer failed to communicate clearly, handle your claim promptly, or tell you about your complaints rights, this is a Fair Insurance Code breach that IFSO will consider.

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Getting Help With Your Appeal Letter

Your internal complaint and IFSO submission should be structured, evidenced, and specific about the policy provisions at issue. ClaimBack can generate a professional appeal letter for New Zealand insurance denials that references the relevant policy clauses, consumer protection framework, and IFSO referral language. Visit claimback.app to create your letter in minutes.

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Summary: New Zealand Insurance Appeal The Full Fight

1. Request the written rejection with specific policy clause citations from your insurer
2. File a formal internal complaint — insurer must respond within 20 working days
3. Escalate to IFSO (ifso.nz / 0800 888 202) if unresolved — free, within 2 years of the decision
4. Request all information held about your claim via a Privacy Act request
5. Get independent expert evidence — builder's report for property, specialist report for health
6. Check CEIT if your dispute involves earthquake damage in Canterbury or elsewhere in NZ
7. Consider legal advice for claims that may exceed IFSO's jurisdiction or involve complex legal questions

New Zealand's IFSO scheme is one of the most accessible and effective insurance dispute resolution systems in the world. Don't leave your rights unused — a free, independent review can produce a very different outcome from the insurer's internal decision.