AFCA Upholds Insurer's Premium Increase Amid Consumer Complaint

A recent decision by the Australian Financial Complaints Authority (AFCA) has ruled against a homeowner seeking an $18,000 refund from Allianz.

The homeowner claimed that the insurer failed to adequately inform her about substantial increases in her optional flood cover premiums.

Initially, her monthly payments surged from $369 to $1277 in August 2022, a change she only noticed in March of the following year through her bank statements.

Allianz defended its position, citing that it had communicated with the homeowner according to her specified preference by sending renewal documents to her property. These documents, sent in 2022 and 2023, were not returned or marked undelivered. Despite receiving all pertinent documents between 2016 and 2021, the policyholder could not find written notification regarding the recent premium hike and suggested this might be due to postal issues at her multi-unit residence. She argued that additional notifications could have been sent via registered mail or email.

The insurance company justified the increased premiums by explaining that a reassessment had categorised the homeowner's property as being in an "extreme flood risk zone," which impacted the premium costs. While the homeowner referenced a local council's assessment classifying the location as low flood risk, AFCA determined that an email exchange from March 2020 between her builder and the council did not suffice for evaluating the flood risk.

AFCA noted that the complainant was given the option to provide her own flood risk assessment, either with an independent hydrologist or from a relevant authority, but chose not to do so. The authority concluded that the insurer had fulfilled its duties by sending all necessary documents and deemed it reasonable for the policyholder to be aware of the premium changes.

According to AFCA, the complainant was responsible for reviewing the policy documentation and monitoring the direct debit transactions. If dissatisfied, she should have contacted Allianz at the time of renewal or explored alternative coverage options. The delay of 19 months before addressing the issue did not support her case.

This ruling underscores the importance of consumers actively monitoring insurance communications and being aware of their policy details, especially after premium adjustments based on risk reassessments. It highlights the principles of consumer responsibility in financial management, particularly in the complex realm of insurance.

The decision may encourage insurers to review and possibly enhance their notification processes to mitigate similar disputes. For consumers, this serves as a prompt to diligently review insurance documentation and address any concerns promptly with their insurers. Additionally, property owners in high-risk areas may want to proactively engage expert assessment to ensure their risk categories are accurate and justified.

Published:Monday, 1st Sep 2025
Source: Paige Estritori

Share this news item:

Insurance News

AFCA Upholds Insurer's Premium Increase Amid Consumer Complaint

01 Sep 2025: Paige Estritori

A recent decision by the Australian Financial Complaints Authority (AFCA) has ruled against a homeowner seeking an $18,000 refund from Allianz. The homeowner claimed that the insurer failed to adequately inform her about substantial increases in her optional flood cover premiums. Initially, her monthly payments surged from $369 to $1277 in August 2022, a change she only noticed in March of the following year through her bank statements. - read more

Rising Group Premiums Pose Challenges for Australian Life Insurance

28 Aug 2025: Paige Estritori

Insurance premiums for group life policies with long-term benefits have surged between 15% to 25% on average in the first half of the year, according to a mid-year market update from Marsh Australia. While the steepest increases affected those with adverse claims experiences, short-term rates and premiums for permanent disabilities remained relatively steady. The sector has also become more selective, with insurers adopting stricter underwriting standards, particularly eschewing high-risk industries. - read more

Concerns Arise Over Construction Code Pause Amid Housing Push

28 Aug 2025: Paige Estritori

The federal government's initiative to accelerate housing development by relaxing certain building regulations has raised alarm within the insurance sector. Housing Minister Clare O’Neil announced changes on social media, indicating a strategic pause on parts of the National Construction Code to expedite building approvals and encourage the construction of much-needed homes across Australia. This move comes in response to challenges in the approval process, which often delays construction. - read more

RACQ Insurance Ordered to Increase Payout After Claim Handling Flaws

27 Aug 2025: Paige Estritori

RACQ Insurance has been instructed to bolster a payout to a customer following a ruling by the Australian Financial Complaints Authority (AFCA). The dispute arose after the insurer's handling of a house fire claim lodged by a woman in October 2023 was found lacking. The fire, initiated by scented candles, resulted in significant fire and smoke damage to her home. - read more

ASIC Review Puts Life Insurance Sector Under Scrutiny

26 Aug 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has spotlighted significant shortcomings in the direct sale of life insurance products, urging the industry to reassess its sales practices. The recent review unearthed ongoing issues with remuneration structures, indicating that some insurers still link commissions to sales targets, potentially fostering aggressive sales tactics. The study further revealed a troubling rise in claims disputes, with reported cases more than doubling since 2018, raising concerns about the transparency and trustworthiness of these policies. - read more

Commercial Property Insurance Articles

Beyond the Basics: Essential Add-Ons for Comprehensive Commercial Property Insurance

Commercial property insurance is a vital safeguard for businesses and landlords, protecting physical assets from a variety of risks. This type of insurance covers a range of properties, from office buildings to retail spaces, ensuring that in the event of damage or loss, you have financial support to recover your investment. - read more

Understanding Commercial Property Insurance for Multiple Locations: What Landlords Need to Know

When it comes to owning commercial properties in Australia, understanding the ins and outs of insurance is crucial. Commercial property insurance serves as a safety net, protecting your valuable assets against unforeseen events. It's designed to cover the buildings themselves, as well as any equipment, inventory, and even loss of income due to disruptions. - read more

What Factors Affect Commercial Property Insurance Premiums?

Commercial property insurance is designed to protect businesses and landlords against losses to their buildings and other related assets. This type of insurance covers various incidents, such as fire, theft, and damage from natural disasters. It's essential for safeguarding not just the physical property but also the livelihood associated with the business operations conducted within that space. - read more

How Deductibles Impact Your Commercial Property Insurance Premiums

When it comes to commercial property insurance, a deductible is the amount of money a policyholder agrees to pay out-of-pocket before the insurance coverage kicks in. This can be a fixed dollar amount or a percentage of the total insured value. Understanding how deductibles work is crucial for any landlord or business owner seeking to protect their assets effectively. - read more

Is Commercial Property Insurance Mandatory? What Every Landlord Should Know

Commercial property insurance is a type of coverage designed to protect property landlords and investors from various risks. It typically encompasses buildings, equipment, and other assets associated with commercial spaces. Understanding this insurance is crucial for anyone involved in property leasing or investment, as it can safeguard against significant financial loss. - read more

Knowledgebase

Beneficiary:
The person or entity designated to receive the death benefit from a life insurance policy.