An insured who argued premium increases on his income protection policy were unjust has lost a dispute before the financial ombudsman.

The Australian Financial Complaints Authority says it does not have the power to review the general fairness of a premium increase, and the rises were properly disclosed and correctly applied.

The man took out the policy with Resolution Life in October 2000, with a level premium structure.

There was an auto-inflation feature that meant the monthly premium and benefit increased each year in line with the consumer price index.

Resolution cancelled the policy in September 2023 when premiums were not paid.  

The complainant said price increases were “unjustified, oppressive and invalid” and the premiums should be readjusted or refunded and his policy reinstated.

He said that from 2020, premiums increased by 165% over three years and this was not due to a genuine rerating but an attempt by the insurer to force insureds to terminate their policies.

The ombudsman says that, although the policyholder saw an ulterior motive, premiums for IP policies have increased significantly across all insurers, in part due to the high incidence of mental health claims and longer benefit periods. 

It says the policy allowed the insurer to increase premiums and the man did not notify it that he wanted the auto-inflation feature removed.

The complainant had the benefit of IP cover while the policy was in force and it would not be fair to now receive additional years of cover for free.

Read the determination here.