Property owners have lost their challenge against a 500% premium rise on their home and contents policy after the complaints authority ruled the rise reflects their updated flood risk.

The premium climbed from $2401 in August 2022 to $13,237 in 2023 and $14,283 the following year, and the policyholders argued this was unfair because they did not live in a historically flood-prone area. They noted the insurer’s maximum predicted flood depth was below a nearby flood levee.

They also said they were not adequately informed about the 2023 increase at renewal and only became aware of the change in July last year.

Insurer Allianz said the increase was correctly calculated, citing mapping from the National Flood Information Database and Victorian planning department that showed the home at risk of flooding.  

The insurer said it began underwriting the property in 2021 and previous premiums were not assessed using its flood database.  

Allianz provided information showing it sent renewal invitations to the policyholders’ addresses and made multiple attempts to call them, but these went unanswered.

The Australian Financial Complaints Authority says the insurer has shown there was a heightened flood risk, while the complainants did not provide flood mapping or expert reporting to support their argument to the contrary.  

“As the complainants have not shown there has been an incorrect application of the premium, AFCA cannot require that the insurer reduce premiums on that basis.”  

AFCA also finds Allianz took appropriate steps to inform the policyholders about the changes, and the onus was on the complainants to contact the insurer if they did not want to renew.

See the ruling here.