A complainant who sought to have his pet insurance premium reduced after his insurer raised prices by more than 40% has lost his dispute.

The man first took out the policy with Petsure around October 11 2020, at $960.90 annually. When he renewed his policy for the following year, his premium rose to $1353.19.

The policyholder said the 40.8% increase was excessive and demanded that the premium matched the previous year, and that the insurer refund him the difference.

Petsure argued that the increase was appropriately calculated, saying the premium rose because the complainant no longer had his first-year policy discount applied, and also because of an increase in claims costs.

The insurer explained that the complainant received a two-month discount, amounting to $189.93, because it was his first year on the policy. It said that without the discount, the complainant’s initial premium would have been $1150.73.

Petsure told the Australian Financial Complaints Authority (AFCA) that it must price its policies in a “sustainable manner to ensure it can continue to provide the broad range of covers”.

The complainant said he was unaware his policy had a first-year discount applied, and that Petsure should have informed him of any price changes.

AFCA said Petsure gave a “clear notice” that the premium would be recalculated on each renewal and that several factors could impact prices.

The insurer emailed the complainant a policy renewal notice and a new product disclosure statement (PDS), which informed him about the increased prices about a month before the expiry of the first policy. AFCA said the insurer gave the complainant ample time to consider the terms.

“The complainant had sufficient opportunity to consider the renewal terms and premium, and to seek cover elsewhere if he was dissatisfied with them,” AFCA said.

AFCA said it was not unreasonable to expect premiums to increase year to year and that insurers are “entitled to set the level of premium by exercising their commercial judgment in a competitive and open market”.

It said Petsure’s explanations for the premium increase were fair and appropriate to market standards.

“There is no evidence the renewal premium is so significantly out of sync with the market, to support it was excessive,” AFCA said.

Petsure was not required to adjust the premium or refund the policyholder any costs.

Click here for the full ruling.