The dispute authority has urged insurers to better explain the rationale for premium increases after a sharp rise in consumer complaints on the issue.  

The Australian Financial Complaints Authority says premium increase disputes account for about 7% of all cases so far this financial year, up from 3% last year. It adds that at one stage in November, the proportion spiked to 12%.  

Lead ombudsman for insurance Emma Curtis told an AFCA member forum the trend comes as customers continue to face cost-of-living pressures.  

“We think that when consumers don’t understand the reasons behind a premium increase ... that can tend to lead to a complaint coming to the insurer and ultimately to AFCA,” she said.  

Ms Curtis acknowledges there are fair reasons for raising prices, and says the issue is “not so much about the increase itself, but about that lack of clear information explaining why”.  

“Things like catastrophe modelling, claims trends, policy adjustments, they are fairly complex issues,” she said. “The better you can try to explain those to consumers and the effect that they’re having on their individual pricing, the easier it’s going to be for consumers to understand ... but without that explanation, that’s when frustrations increase, and complaints rise.”  

AFCA senior manager for insurance Cath Mortlock says insurers should provide front-line staff with accurate information and tell customers at renewal why premiums have increased.  

“I think that will just promote a real, transparent relationship, and it will give consumers the opportunity to make an informed decision about what they want to do now,” she said.  

The authority says it will develop an external dispute resolution guide for premium disputes, to advise insurers on what information is needed in submissions to AFCA.  

The guide aims to help streamline cases and “save any more delays”.

Claim delays continue to be the number one source of complaints, followed by claim amounts and claim denials.

The number of complaints over the first six months of the year remained flat, with 13,000 lodged. Motor and home insurance were the most common sources of dispute by line.

AFCA says the number tops 15,000 when accounting for consumer credit insurance.  

Ms Curtis says the levelling out of complaint numbers is a “pleasing result”, and there are hopes numbers will soon reduce.  

But she flags concerns over CCI and travel insurance, and says insurers should do more to resolve complaints earlier. “I think there’s more that insurers can do around product design and claims management and disclosure in policy documents to help reduce those complaints in travel insurance.” 

Regarding Ex-Cyclone Alfred, Ms Curtis says the ombudsman has begun to receive complaints, and she calls on insurers to use their experience from previous disasters to resolve minor issues.  

“We would really expect insurers to get on the front foot to resolve claims promptly, to communicate clearly with their customers, to talk about expected time frames and really manage expectations if there are going to be any delays to normal time frames for claims processing.  

“We want only more complex complaints to come to us. We think small-value, single-issue claims should be dealt with by insurers effectively, and we don’t expect to see those types of complaints coming through to us.”  

She urges insurers to resolve complaints from previous natural disasters before they “start on this new tranche”.