A policyholder has won a reduction to their home and contents premium after their insurer raised it more than 60% at renewal.

The homeowner said the “substantial increase” was unfair and did not reflect the property’s risk, noting there had been no changes in the area to warrant the rise.

Suncorp defended its decision, saying the premium change followed an increase to the NSW fire service levy, which was up by 0.6%, and “an update to the renewal premium capping”.

It said the insured property had been rated “very high” risk for bushfire and hail, and the changed premium reflected this.

But in a dispute ruling, the Australian Financial Complaints Authority says Suncorp “did not provide any persuasive evidence to show how the risk assessment details have changed from one policy period to the next”. 

An AFCA ombudsman said: “In addressing the circumstances of the subject risk, the insurer says the insured property is classified as a very high risk of bushfire and hail.

“There is no evidence that this was not the case in the previous renewals or that it re-rated the risk in this intervening period. 

“While I accept the [fire levy] has increased, this is minimal and does not account for the sharp premium increase of approximately 60%.”  

The authority says the insurer referenced “generic factors” that affected policies year on year, but says this has not “justified its position”. It says the insurer could have highlighted factors that would explain the increase, such as the policyholder’s claims history, but it did not.

“The insurer could not provide a reasonable explanation or justification for the significant increase despite having a sufficient opportunity to do so. This indicates it is likely the premium has been calculated incorrectly. Therefore, the premium should be readjusted.”  

AFCA requires Suncorp to adjust the premium in line with the average increase since 2020.  

Click here for the ruling.