A complainant who was not told by XL Insurance Company SE that he would have to pay twice as much to take out a new travel policy has lost his case.

The dispute arose after the complainant acted on the insurer’s advice to buy a new policy since the original one that he bought in March last year could not be extended beyond 12 months from the time it was issued.

He had sought an extension as his trip in March this year was delayed to next year because of the pandemic.

Following the advice of the insurer, the complainant cancelled his old policy for a premium refund and applied for a new one. He was quoted $1652.61 for the new policy, which was similar in coverage to his previous policy apart from some COVID-related changes.

The complainant took his dispute to the Australian Financial Complaints Authority (AFCA), insisting the insurer must sell him the new policy for $724.94, the premium he originally paid.

But AFCA dismissed the complainant’s arguments, ruling it would not be fair to compel the insurer to sell him a new policy at the same price as the old one given the circumstances.

The complainant would still have had to cancel the original policy since it could not be extended for another 12 months to cover the new travel period and this remained the case even if the insurer had informed him the premium for a new policy would be different.

“In short, the complainant still faces the same predicament of having to buy a new policy at a higher price, whether the insurer told him about the premium increase or not,” AFCA said.

“Given this, I am not satisfied the complainant suffered a loss he would not otherwise have suffered, if the insurer did not mislead him.”

AFCA says the exchanged information shows the insurer “misled” the complainant, who had specifically asked if there was a “downside” to buying a new travel policy and if it would be “the same” as the original one.

The insurer responded to the questions by saying the policy would be the same and there would be some additional cover for COVID-related events. It did not inform the complainant of any downside or that the premium for a new policy would change.

XL Insurance says its “messaging” about the premium could have been clearer and offered the complainant a 10% discount on premium.

AFCA says the insurer is not required to take any further action on the complaint, other than to provide the 10% premium discount if the complainant decides to go ahead with the new policy.

Click here for the ruling.