Homeowners continue to feel hard done by as they’re slugged with large premium rises, as a spate of determinations published by the dispute ombudsman shows.

The Australian Financial Complaints Authority rarely intervenes in such complaints, unless an error has been made, because its jurisdiction is limited and it cannot compel an insurer to disclose how premiums are calculated.

However, it has previously encouraged insurers to provide as much information as possible to frustrated consumers to prevent it being overloaded with complaints.

Below is a summary of some recent determinations on the issue.

300% increase no breach of law

A home and contents insured says a 308% increase in premiums is “price gouging” and against the Australian Consumer Law.

He argues his base premium increased from $2721.94 to $7776.48, while a quote for a neighbouring property was $2550.55.

But Allianz says the rise is due to the removal of a 30% no-claims bonus, plus a change in the pricing model and other factors, and says the neighbouring property is not comparable due to differences in construction type and the absence of a pool.

The customer accepts he has made claims on the policy but says that should result in a 30% rise, not a 300% rise.

AFCA says there is no evidence of misrepresentation or non-disclosure, or that an error has been made, and there has been no “gouging” or breach of the law.

AFCA sides with insurer in bushfire row 

A landlord complained about his “predatory” insurer after a 62% increase in premiums was partly attributed to rising bushfire risk.

The complainant says there have been no fires in his area and that Suncorp “acted unreasonably and unfairly”.

The insurer says the property has “significant surrounding vegetation”, which plays a crucial role in bushfire vulnerability, and while it is not immediately adjacent to dense bushland, embers can travel 500 metres.

“I acknowledge the complainant says the insurer has not identified or disclosed a specific bushfire that caused it to increase the premium,” an ombudsman says.

“However, I am not persuaded this means the insurer has not adequately explained the basis for the increase, particularly as it has identified a range of factors it considers when calculating the premium.” 

No need for ‘total transparency’ on replacement estimates

A QBE customer says she has been overcharged home premiums for “a number of years” for her full-replacement policy, arguing estimates used to calculate the cost of a rebuild after a total loss should have been disclosed.

She says the estimates used were “inaccurate and unreasonably high” and that if she had known about them, she would have altered her cover sooner to save money.

QBE says it was not obliged to disclose the estimates, and AFCA agrees, noting they were “commercially sensitive” at the time.

“A consumer is not entitled to know every factor used to calculate a premium,” AFCA says. “Total transparency – while potentially helpful to an insured – is not required at law. The insurer has disclosed what it was required to disclose.” 

AFCA says there is no evidence the premiums were calculated incorrectly.

Loyal customer alleges years of overinsurance

The complainant says he has been with the same insurer for 37 years, and that last year he noticed he was “significantly overinsured”.

He says Hollard applied automatic indexation that lacks transparency – and that for 14 years an annual increase of 6% was applied to the sum insured “despite actual inflation and construction cost increases being significantly lower (around 2.5%-3.2%)”.

The customer says renewal notices did not disclose the indexation rate or a way to opt out and he wants a refund of excessive premiums paid.

Hollard says the 6% figure was appropriate for the time, and AFCA has found no basis to intervene.

“While I note the insurer did not disclose the basis of its decision, I am not satisfied that the insurer is required to disclose the inflation indexation it applies at each renewal or outline the basis of any sum insured adjustment,” an ombudsman says. 

“The insurer has disclosed the premium it is charging and the level of cover it is providing, and in terms of its obligations, I accept that it has met them.”

Sending renewal notice is enough

An Allianz customer who has complained about an “unreasonably high” premium says he did not receive a renewal notice outlining the changes.

But AFCA says the insurer provided evidence to show an email was sent to the Hotmail address provided by the insured, and there is no evidence the email bounced.

“If the renewal invitation was filtered by the complainant’s Hotmail account to a ‘junk folder’, I accept that this still constitutes being sent by the insurer,” an ombudsman says.

“On balance, I am satisfied that the insurer’s dispatch information shows it likely emailed the complainant’s renewal notice to him on September 4 2024, in compliance with the insurer’s obligations. The insurer is not required to establish that the renewal invitation was read. Only that it was sent.”

The insurer previously told the complainant it had been unable to send the documents, but within a week it told him this was incorrect and apologised for the error.