AustraliaMy insurance company is taking months to process my claim. Is there a duty to act in good faith?
Yes, insurers in Australia owe a duty to act in good faith when handling claims, and unreasonable delays may breach that duty under the Insurance Contracts Act 1984.
What the Law Says
Australian insurance law imposes a clear legal duty on insurers to act honestly and fairly when dealing with policyholders — especially during claims handling.
The Insurance Contracts Act 1984 (Cth) is the main federal law governing insurance contracts in Australia. Section 13 of this Act states that 'each party to an insurance contract has a duty to act towards the other party with the utmost good faith'. This duty applies throughout the life of the contract — including when a claim is made and assessed.
While the Act does not specify exact timeframes for claim processing, ASIC’s Regulatory Guide 271 (RG 271) expects insurers to acknowledge claims within 2 business days and provide a decision or update within 30 days — unless the claim is complex. Unreasonable delay without justification may amount to a breach of the duty of utmost good faith.
A breach of section 13 does not automatically void the contract, but it may give rise to remedies such as compensation or court-ordered corrective action. The duty is mutual: both insurer and insured must act honestly and transparently.
Statutory TextEach party to an insurance contract has a duty to act towards the other party with the utmost good faith.
— Insurance Contracts Act 1984, s. 13 — Duty of utmost good faith
What to Do
Contact your insurer in writing to request a written update on your claim status and reasons for any delay.
If unsatisfied after 30 days, escalate to the Australian Financial Complaints Authority (AFCA) — free and independent.
Lodge your AFCA complaint within 60 days of receiving the insurer’s final response.
Keep records of all communications, including dates, names, and promises made.
Seek legal advice if the delay appears unreasonable and causes financial harm — you may have grounds for compensation.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.