An RACV motor insurance policyholder who disputed a 26% rise in premium for his Porsche Cayenne sport utility vehicle has won his case before the Australian Financial Complaints Authority (AFCA).

The complainant accepts the insurer was entitled to impose an increase when the policy was renewed on April 30 this year but disagreed with the extent of the adjustment, saying it was done without proper basis, was unjustified and out of proportion.

He compared the 26% hike - which raised his premium payable to $3342.31 - to the previous year when the insurer raised the rate by 3% to $2474.59. He also pointed out that the insurer increased the premium for his wife’s Porsche Macan by 9% when the policy was recently renewed.

The policyholder says a claim he made in November last year for malicious damage to the vehicle should not be treated as an at-fault claim for the purpose of the policy. He believes the insurer miscalculated his premium and it should be required to recalculate the payable premium in a fair and reasonable manner.

RACV Insurance insisted the calculations had been made correctly in accordance with its underwriting process. It says the claim for malicious damage and “increasing age” of the 2016 Porsche vehicle were the main reasons behind the 26% premium rise.

The insurer maintains it has provided information to the complainant explaining it is entitled to increase the policy premium at renewal. Furthermore the insurer regularly reviews the premium loadings attached to each factor and increases or decreases them based on recent claims experiences.

However, AFCA says RACV Insurance must limit the premium increase to 10%, ruling the insurer has not provided “reasonable information” to justify the 26% rise.

AFCA accepts the supporting information it wants from RACV Insurance is “commercially sensitive” and that the insurer is not obliged to make it available for the complainant’s review.

AFCA notes also that an RACV Insurance representative has requested several times for deadline extensions to provide the supporting information, culminating in a final response on October 16 essentially repeating what has been provided to the mediator.

“I find this concerning, given the insurer was requested on more than one occasion to provide supporting information, the insurer on more than one occasion advised it was sourcing this information and in doing so continued to delay finalisation of this matter,” AFCA said.

“However, it is expected that the insurer provides reasonable information in support of its position to AFCA for its consideration and which is common practice amongst the insurers.”

AFCA says it has made the ruling on the basis that an adverse inference be drawn from the insurer’s failure to comply with its request on a matter of material importance.

“It is accepted that the insurer was entitled to increase the payable premium at policy renewal for the 2020/2021 period,” AFCA said. “I am also satisfied it is reasonable for the insurer to have taken the complainant’s recent claims history into account in its consideration of the applicable premium at renewal of the policy.

“However, I am not satisfied the insurer has been successful in showing its calculated increase of 26% is accurate, in line with its underwriting guidelines, nor that it is fair in all the circumstances.”

Click here for the ruling.