Ombudsman Sides with Insurer on Imposed Excess Dispute

0

The policyholder contended that he was unaware of the increased charge until he filed a claim in November of the previous year. However, the insurer, IAG, clarified that the imposed excess was communicated during the policy renewal in July. This move was justified by the insured's frequent claims and "pattern of loss," with guidelines indicating a $2000 excess for customers with six or more claims within three years, barring exceptional circumstances.

The claimant, who had submitted seven claims in three years due to weather-related incidents and accidental damages, argued that the imposed excess was unfairly added without his consent. He described it as "unfair, unilateral and surreptitious" and claimed that he wasn’t informed about the consequences of multiple claims leading to an imposed excess.

AFCA confirmed that the policy renewal documents clearly outlined the imposed excess and stated that the insurer was not obligated to specifically notify the insured that frequent claims might result in additional charges. The ombudsman expressed confidence that the insurer met their obligations by informing the complainant ahead of the policy renewal.

The AFCA ombudsman stated that it was then up to the complainant to review the policy terms and conditions offered at renewal (including the excesses) and decide if he wanted to accept these terms. By paying the premium, the complainant accepted the terms of the policy renewal, including the imposed excess

This decision has significant implications for policyholders and insurers alike. It underscores the importance of policyholders thoroughly reviewing renewal documents and understanding the financial implications of a high claims history. Meanwhile, it solidifies insurers' authority to impose additional costs under specified circumstances, influencing how claims are managed and communicated.

The ruling serves as a reminder to both consumers and insurers of the need for transparency and clarity in presenting policy terms. Policyholders are encouraged to regularly review and understand their insurance agreements, while insurers may need to consider enhancing their communication strategies to prevent misunderstandings. This decision is likely to foster discussions around consumer rights and the obligations of insurers, potentially prompting policy reviews to ensure fairness and clarity for all parties involved.

Published:Monday, 25th Aug 2025
Source: Paige Estritori

Share this news item:

Insurance News

Clear

AFCA Upholds Insurer's Premium Increase Amid Consumer Complaint

01 Sep 2025: Paige Estritori

A recent decision by the Australian Financial Complaints Authority (AFCA) has ruled against a homeowner seeking an $18,000 refund from Allianz. The homeowner claimed that the insurer failed to adequately inform her about substantial increases in her optional flood cover premiums. Initially, her monthly payments surged from $369 to $1277 in August 2022, a change she only noticed in March of the following year through her bank statements. - read more

Rising Group Premiums Pose Challenges for Australian Life Insurance

28 Aug 2025: Paige Estritori

Insurance premiums for group life policies with long-term benefits have surged between 15% to 25% on average in the first half of the year, according to a mid-year market update from Marsh Australia. While the steepest increases affected those with adverse claims experiences, short-term rates and premiums for permanent disabilities remained relatively steady. The sector has also become more selective, with insurers adopting stricter underwriting standards, particularly eschewing high-risk industries. - read more

Concerns Arise Over Construction Code Pause Amid Housing Push

28 Aug 2025: Paige Estritori

The federal government's initiative to accelerate housing development by relaxing certain building regulations has raised alarm within the insurance sector. Housing Minister Clare O’Neil announced changes on social media, indicating a strategic pause on parts of the National Construction Code to expedite building approvals and encourage the construction of much-needed homes across Australia. This move comes in response to challenges in the approval process, which often delays construction. - read more

RACQ Insurance Ordered to Increase Payout After Claim Handling Flaws

27 Aug 2025: Paige Estritori

RACQ Insurance has been instructed to bolster a payout to a customer following a ruling by the Australian Financial Complaints Authority (AFCA). The dispute arose after the insurer's handling of a house fire claim lodged by a woman in October 2023 was found lacking. The fire, initiated by scented candles, resulted in significant fire and smoke damage to her home. - read more

ASIC Review Puts Life Insurance Sector Under Scrutiny

26 Aug 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has spotlighted significant shortcomings in the direct sale of life insurance products, urging the industry to reassess its sales practices. The recent review unearthed ongoing issues with remuneration structures, indicating that some insurers still link commissions to sales targets, potentially fostering aggressive sales tactics. The study further revealed a troubling rise in claims disputes, with reported cases more than doubling since 2018, raising concerns about the transparency and trustworthiness of these policies. - read more