New Zealand consumers are powerless over insurance premium increases – advocates

General picture of insurance, houses, houses.
Photo: 123rf

An Australian insurer has been told to reverse a 60 per cent increase in a customer’s insurance premiums after they complained – but New Zealand policyholders do not have the same recourse.

ABC reported that the Australian Financial Complaints Authority (AFCA) ordered the massive increase to be scrapped because it was not satisfied the insurer “fairly applied the significant premium increase or justified its position.”

Suncorp is one of Australia and New Zealand’s largest insurers, with brands including Vero and Asteron Life.

Data from earlier this year showed home insurance premiums in New Zealand rose by more than 20 percent on average annually, although premium increases are believed to have stabilized since then.

Alexandra Kelly from the Australian Financial Rights Legal Center told the ABC the case meant more people should call out their insurer about premium increases.

“I would be much more encouraging now that we have confirmation that the ombudsman is putting responsibility back on the insurer and asking if they are not providing enough information.”

In response, New Zealand’s Insurance and Financial Ombudsman system said it could not consider cases like Australia’s because its rules did not allow complaints about premiums to be considered.

“However, many people contact us about premium increases – this was one of our top five complaint inquiries last year.”

“While the IFSO system is pleased that consumers know where to take their insurance complaints, we recognize that many New Zealanders are struggling due to the rising cost of living and know that the additional burden of increased insurance premiums means a lot. “Pressure on household budgets.

“We are seeing an increased number of complaints to the IFSO program due to increasing severe weather events and more frequent natural disasters.

“As an ombudsman service, the IFSO system is neutral and can only deal with complaints about premiums where an insurer has not done what it promised; it cannot address premium increases on a regular basis or with age-related fluctuations. as specified in the policy.

“If consumers have information that shows the increase in their premiums is incorrect or unreasonable, we encourage them to request a review through their insurer’s internal complaints process. If you are not satisfied with the response to the complaint, you can contact the IFSO system for further information about whether it is a case we can investigate. Otherwise, they may need to consider referring their complaint to the Disputes Tribunal or District Court.

New Zealand consumer insurance specialist Rebecca Styles said there should be a mechanism for consumers to dispute the price.

“There should be more transparency about how premiums are calculated, particularly given that risk is increasingly being assessed on a per-property basis.”

Consumers can lodge a complaint with the Trade Commission or the Financial Markets Authority.

RNZ contacted the Insurance Council of New Zealand for comment but was declined.

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