Frustrated Australians are pushing back against insurers after copping massive premium increases by taking cases to the Australian Financial Complaints Authority. But the ABC has discovered three cases where the ombudsman refused to consider complaints about excessive prices because it was outside their rules.
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00:00Warren had an interesting case. He had a renewal with his insurer he'd been with for a few
00:06years. He'd had no claims. He'd had no severe weather events that impacted his property,
00:12but his premium went up by 109%. And so he sought an explanation from the insurer, which
00:19he was unhappy with. So he tried to take it to the financial ombudsman, but was unsuccessful.
00:25They said it was outside their rules, and he questions whether that is in fact correct,
00:30given that it has considered other similar cases. Let's have a listen to what Warren
00:35told me.
00:37We received a premium notice from Coles last year, and the premiums actually doubled. The
00:44premiums went up by 109%. There was no explanation given in the letter. We followed it with Coles,
00:50and they just told us there was generic conditions and changes in the market that had forced
00:55these increases. The insurance companies expect us to disclose a lot of information, but they
01:00don't seem to be prepared to disclose information about the changes to the premiums and what's
01:06caused those premium increases.
01:09Michael, what have consumer advocates said about the cases being knocked back?
01:13Yes, well, I've spoken to the Financial Rights Legal Centre, and former ACCC boss Alan Fells
01:20and they've reviewed Warren's case and two others that I discovered, and they're very
01:25concerned about these knockbacks that the ombudsman is making without duly considering
01:31the claims. They think they may be making mistakes in these cases, and so have called
01:37for the ombudsman to launch an urgent internal review, and I think this is quite important
01:43at the moment because insurance prices have been rising steeply. We know that they're
01:49up by about 14% in the last year, and that people are really concerned about it, and
01:55when there's not adequate justification from the customer perspective about why that increase
02:02is happening, they want to be able to do something about it, and they want to know whether the
02:07ombudsman is available to them or not.
02:10And how has the Australian Financial Complaints Authority responded?
02:15It says it will launch an internal review in response to our story, which is significant,
02:22but it also points out that it has very limited jurisdiction here, so it can only consider
02:28cases where premium has been incorrectly calculated, but consumer advocates point out that it's
02:35actually quite difficult for a customer to prove that because all the information resides
02:40with the insurer about that, and so unless that's provided to the customer in a sufficient
02:46way for them to challenge, the ombudsman really needs to get involved to have a look at what
02:51was calculated, the justification for it, and make a ruling on it, and in a recent case
02:56they did do that. They ordered Suncorp Insurance had to scrap a 60% increase in a home insurance
03:03premium rise case, and so consumer advocates are saying, well, there's an inconsistency
03:09here that they believe needs to be sorted out and sorted out quickly.
03:14And insurers are under pressure to tell customers more about premium prices. What's being called
03:19for, Michael?
03:20Yes, the ombudsman and consumer advocates say that a lot of problems would be sorted
03:25out if more information was provided to customers, and there's been a Senate inquiry that released
03:31its report this week which said that they should provide detailed breakdowns to customers
03:37about why premiums are going up, and they're also calling for the consumer watchdog the
03:44ACCC to be given price monitoring powers. Now, this is something the ACCC already does
03:51in the domestic aviation space, and it's really contributed to debate around airline ticket
03:59pricing and whether that's fair or not, and put a lot of scrutiny on those companies.
04:04So it is significant, I think, what's happening in this space. The Albanese government told
04:10me that they've had a taskforce inside Prime Minister and Cabinet looking specifically
04:16at insurance affordability issues, and that they'll have more to say about it. So I think
04:21there's a lot happening in this space, given the community concern about it and how much
04:25it's been driving inflation as well, and there will be changes to come, I think it's fair
04:30to say.