A homeowner who accused an insurer of “blatant price gouging” when his premium increased by 60% has lost a dispute after the complaints authority found the rise was due to appropriate commercial factors. 

The man’s home cover with RACQ Insurance-underwritten Honey rose from $1033 a year to $1654 on renewal.

The complainant said the insurer initially had reasonable pricing and presented a “different way of doing things, such as installing smart sensors to incur a premium discount”.    

RACQ Insurance said premiums rose due to several factors, including data from its new geocoding software, which provided more accurate risk determinations for individual properties.

It also cited a 0.6% increase in NSW’s fire service levy and the increasing cost of claims.  

The policyholder said RACQ’s reasoning involved “vague corporate speak”, and it should have had to prove his home’s risk profile had changed.  

In its dispute decision, the Australian Financial Complaints Authority says there is no evidence the insurer misrepresented or failed to disclose reasons for a premium increase.

It notes the renewal notice refers to risks associated with the property and “external factors” such as changes to business operations.  

The insurer provided reasonable explanations regarding its new risk software, which was not in place when the policy was first bought, and the state levy increase, AFCA says.  

It notes that risk ratings and weightings applied when calculating premiums fall outside its jurisdiction.  

“While there is no dispute the insurance premium increased substantially, I am satisfied this was based on rating factors and weightings applied by the insurer, via a new software system, to determine the base premium,” an AFCA ombudsman said. 

“I am not persuaded ... there were any misrepresentations or non-disclosures, or that the insurer incorrectly applied any fees or charges. 

“Accordingly, it would not be fair to require the insurer to reduce the premium.”   

See the ruling here.