A motor policyholder has lost a dispute over a 97% increase to his annual premium after the complaints authority found his insurer made no error setting the price.

RACV Insurance lifted the premium to $1807 at renewal from $918 the previous year.  

The policyholder argued the insurer’s explanation for the rise lacked substance, featured “vague claims about rising wages and parts costs” and was “out of step with the consumer price index”.  

He added the increase was unfair because his car’s market value had dropped since the previous renewal.

He later switched to another insurer and obtained a significantly lower premium.  

RACV said factors including higher claim cost estimates, industry-wide pricing challenges and risk adjustments following an at-fault claim in 2024 led to the price rise.

In its dispute decision, the Australian Financial Complaints Authority’s acknowledges the increase was “substantial” but accepts the insurer’s explanation.  

The authority notes the impact of the policyholder’s at-fault claim, saying it is “common industry practice to raise the premium more than would otherwise be the case when a customer lodges a claim and they are found to be at fault”.  

The complainant was free to seek insurance elsewhere, which he has done.  

“The insurer has the right to decide what products it offers, as well as what risks it is prepared to cover, what premiums to set and what rating factors and weightings to apply when setting those premiums,” AFCA said. “The information does not show the insurer made an error when applying the premium increase and the insurer has provided reasons for the increase.

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

See the ruling here.