Media release 25 July 2025
The Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) is reminding insurers to prioritise support for people in vulnerable circumstances, especially in light of recent flooding events and ongoing economic pressures.
In insurance, vulnerability means someone may be more at risk of harm or disadvantage because of their personal situation or how the system works. This could include financial hardship, disability, language barriers, family or domestic violence, age, illness, grief, addiction, or the effects of natural disasters.
“Vulnerability isn’t a label, it’s a situation that can affect anyone,” says Karen Stevens, Insurance & Financial Services Ombudsman. “Insurers need to recognise when someone is struggling and respond with empathy, flexibility, and fairness.”
Stevens says many insurers are already doing this well. After the 2023 floods, insurers proactively identified affected customers, offered flexible claims processes, and provided extra support to those facing hardship.
“But it’s important that insurers keep this focus,” she says. “The cost-of-living crisis isn’t going away, and more people are experiencing financial hardship.”
The IFSO Scheme has seen a record 600 disputes accepted for investigation this year—a 25% increase from last year. While many complaints are resolved quickly, more are staying unresolved even after going through insurers’ internal processes.
One recent case involved a woman who was unwell, suffering from low iron levels that affected her ability to function. She relied on her insurer’s website to check whether a treatment would be covered and went ahead based on that information. Her claim was later declined because the drug wasn’t a subsidised prescription medicine, a detail only found in the full policy wording.
“Many people rely on summaries, not lengthy policy documents, to make decisions,” says Stevens. “Insurers need to make sure those summaries clearly highlight exclusions and conditions, especially as customers experiencing vulnerable circumstances may not be able to easily understand what’s covered.”
In this case, in determining what was fair and reasonable, the IFSO Scheme noted the woman’s vulnerable circumstances and said that the claim should be paid, which the insurer agreed to.
“Flexibility and patience go a long way,” says Stevens. “Sometimes the best thing insurers can do is simply ask, ‘What do you need?’ That question opens the door to better outcomes.”
Insurers are encouraged to:
- Use plain language and offer multiple ways to communicate
- Allow extra time for decision-making
- Document conversations clearly and follow up in writing
- Provide access to specialist support when needed (e.g. interpreters, mental health services)
- Train staff to recognise signs of distress or difficulty and escalate concerns appropriately
“People in vulnerable circumstances deserve to be treated with dignity and respect,” says Karen Stevens. “We expect insurers to be proactive, not reactive, in making sure their services are accessible and fair.”
The IFSO Scheme provides guidance and education to help insurers meet these expectations, including webinars and a short course developed with Massey University focused on complaint response and conversations with customers in vulnerable circumstances.
ENDS
Media contact
Sarah Smythe
Communications Manager, IFSO Scheme
sarah@ifso.nz
021 292 4036