Jet-setting Kiwis' complaints about travel insurance have topped a financial dispute resolution service's case load for the year.

Financial Services Complaints Limited (FSCL) handles complaints for about 5000 members of the industry including financial advisers, finance and insurance companies, credit unions and trustee companies.

Complainants against the travel insurance industry were often disappointed to find the amount and scope of cover under their policy was less than expected, FSCL said in its annual report.

Related story: Kiwi traveller counts high cost of misadventure

Chief executive Susan Taylor said consumers needed to take care when buying travel insurance or relying on free insurance that comes with credit cards.

"Some policies imposed age limits and time limits, which can severely restrict the extent of cover provided under a travel insurance policy."

For example a Kiwi couple, Mr and Mrs M returned to New Zealand after Mr M's mother died. Expecting the airfares to be covered under her credit card's travel insurance, Mrs M's claim for her flights was turned down because her mother-in-law was 83 when she died.

While the policy wording covered lost expenses on the death of a relative, "relative" was defined in the policy to only include relatives aged under 80 at the time the policy was taken out.

FSCL said today it received 1259 complaints for the year to June 2012.

Of those, 92 were investigated, with almost half of all complaints about the insurance industry. Travel insurance was the most frequently complained about financial product with 30 complaints.

Lenders and finance companies received 17 complaints, insurance brokers nine and financial advisers booked four complaints against them.

Breach of contract was fingered as the problem in 43 of the complaints.

Of these, only one complaint was partially upheld. Over 30 complaints were withdrawn while 38 were settled.

Compensation worth $251,410 was negotiated or recommended to be paid to consumers, FSCL said.

FSCL said the level of complaints had gradually increased over the last year but the number of investigations remained lower than expected. The company said this was due to members resolving complaints in-house, low consumer awareness of the complaints resolution scheme and reluctance "on the part of some participants to recognise a complaint and refer an unresolved complaint to FSCL".

All financial service providers who provide services to the public must belong to an approved dispute resolution scheme. These include FSCL, the Insurance and Savings Ombudsman Scheme and the Banking Ombudsman Scheme.

- © Fairfax NZ News

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