Suncorp ordered to slash premium hike as home insurance costs skyrocket
Suncorp ordered to slash premium hike as home insurance costs skyrocket | Insurance Business Australia
Property
Suncorp ordered to slash premium hike as home insurance costs skyrocket
Consumer advocates slam company over premium
Property
By
Roxanne Libatique
Suncorp Group has been ordered by the Australian Financial Complaints Authority (AFCA) to overturn a 60% increase in a home insurance premium following a customer dispute.
AFCA concluded that the insurer had not sufficiently justified the significant rise, raising concerns about how such price hikes are applied across the industry.
Suncorp, which operates under well-known brands including AAMI, GIO, APIA, and Vero, recently reported a 12% increase in its annual net profit to $1.2 billion. Despite this financial growth, the ruling has led to broader discussions on fairness in premium pricing.
“It looks like price gouging an individual customer,” he said, as reported by ABC.
Alexandra Kelly, from the Financial Rights Legal Centre, noted that the ruling could encourage more consumers to challenge premium increases from their insurers. She said that this decision places more responsibility on insurers to explain and justify substantial price changes.
Insurance premium increase complaints
According to ABC’s report, one policyholder affected by rising premiums is Tom Taylor – a Melbourne retiree – who saw his AAMI home insurance premium increase by nearly 55%. When he sought clarification from the insurer, he said no clear explanation was provided.
Now, Taylor is considering escalating his complaint to AFCA, questioning whether long-term customers like him are facing steeper price hikes.
Complaints regarding premium hikes have surged, with AFCA having limited power to intervene in pricing except in cases of non-disclosure or misrepresentation.
In a prior case involving Suncorp’s AAI Limited, a customer challenged a 60% premium increase. Suncorp cited increased bushfire and hail risks as the justification for the hike, along with a small rise in the NSW Fire Services Levy.
However, AFCA found the insurer failed to provide strong enough evidence to support its assessment and ordered the premium to be reduced to match average increases seen since 2020.
Peter Gartlan, co-CEO of Financial Counselling Australia, called the AFCA decision significant, suggesting more oversight of premium pricing is needed.
He called on the Australian Securities and Investments Commission (ASIC) to investigate. In response, ASIC stated that while premium setting is largely a business decision, insurers are expected to be transparent and fair in how they price their policies.
Suncorp Group’s premium calculations
Suncorp, while declining to comment on individual cases, said that its premiums are based on multiple data sources and are reviewed frequently.
“In the case of the AFCA determination, the premium was thoroughly assessed and calculated in accordance with the level of risk associated with the property,” it said in a statement, as reported by ABC.
This ruling comes at a time when many Australians are facing increased financial strain from rising insurance costs.
The report revealed that premiums have risen by 9% on average, with homes in high-risk areas for natural disasters, such as floods and bushfires, seeing even steeper increases.
The average household now spends around 9.6 weeks of gross income on home insurance, with some areas seeing premiums rise by more than 30%.
Related Stories
Keep up with the latest news and events
Join our mailing list, it’s free!
