A complainant who said his insurer incorrectly applied premium increases to properties in close proximity has lost his dispute after an Australian Financial Complaints Authority (AFCA) ruling.

The homeowner held business pack insurance policies for three properties and disagreed with QBE’s decision to charge different premiums for buildings that he believed held “essentially identical risks”.

The policyholder highlighted pricing changes between two properties located 600 metres apart, saying that their premiums had been identical two years ago but were now 16.5% apart.

QBE said that it calculated the premiums based on a location-specific data rating system. It acknowledged that the properties had been geographically close and had similar policies but said that other factors were also considered in premium calculations.

The insurer said its system identified different risk ratings for “three relevant perils” at the locations, influencing the pricing. It noted that weather perils such as cyclones, storms, overland flow and floods were at different risk levels between the properties.

It said it changed its premium rating provider in 2019 and indicated that the homeowner had received discounted prices because he had not been charged full premium amounts in previous years.

AFCA sided with QBE, saying the complainant had not shown that the insurer incorrectly applied the premiums to the property. It acknowledged a “natural catastrophe report” provided by the complainant but said that the insurer’s risk assessment systems had also been valid, relevant and reasonable.

“I have seen nothing to suggest the complainant’s properties were assessed or treated differently from those of other customers in the same circumstances and with the same risk profiles,” the ombudsman said.

The ruling said QBE had responded in detail about why it evaluated the properties at different risk profiles and acted “in accordance with its applicable processes and guidelines in setting the premiums”.

Click here for the ruling.