Consumer group Choice says insurance premiums have spiked but companies are failing to explain the reasons behind their pricing decisions.

The February edition of Choice magazine says of 1435 people it surveyed in November, 829 were aware of a premium increase and 60% of those did not recall being given a reason for it.

“Insurance companies across the industry have been substantially raising some home and contents premiums, usually without giving a reason. If one was given, it was almost always flood-related,” says Choice.

Of 286 survey participants who had been given a flood-related reason, only 25% believed they were a flood risk.

Reports of price increases when there was no flood risk were common and consumers complained they could not opt out of cover and that they were not told how their insurer assessed their risk.

A broker told Choice that insurers are choosing to price themselves out of some postcodes to avoid flood claims.

Choice says although progress has been made, the affordability issue has not been addressed adequately.