A homeowner has lost a dispute after his premium soared 50% – because his insurer said new information revealed the property had an increased risk of damage caused by “storm and escape of liquid”. 

The customer told the Australian Financial Complaints Authority the home and contents premium increase was “unfair and unreasonable” because there had been “no material change” at the property. He accepted premiums might rise each year due to inflation and increased overheads, but said this should only account for a 12%-15% increase.

AFCA has limited jurisdiction on premium rises and can usually only intervene if an error or misrepresentation has been made.  

Insurer Auto & General said the premium was correct and previous prices had been generated on “partial information”.

“The insurer says in March 2024 its data was updated, which included more complete information for the complainant’s address,” AFCA’s ruling says.

“The insurer says the updated and more complete information increased the risk identified for the property being damaged by storm and escape of liquid. The insurer says there has also been an increase due to overheads which has been applied to all policies.”

Auto & General provided a detailed breakdown of the premium and the amount assigned for “various risks and factors”. AFCA says this information – not shown to the complainant “due to its commercially sensitive nature” – does not contain evidence of an error.

“In the absence of evidence that the insurer failed to disclose, misled or incorrectly applied the relevant rating factors, the insurer is not required to reduce the premium charged,” AFCA’s ombudsman says.

“Insofar as the complaint relates to the rating factors and weightings applied in calculating the base premiums, this is outside AFCA’s jurisdiction.

“Further, I am also satisfied the complainant is at liberty to test the market and obtain similar cover elsewhere from a different insurer.

"It is not incumbent on the insurer to provide the lowest or most competitive premiums.”

See the full ruling here.