Customers and legal experts raise questions about potential insurance price gouging

ABC NEWS (Australia)

Major insurance firms have been banking billions of dollars in profits this year, while customers are still coming to grips with steep hikes in their policy premiums. That's prompting questions about whether prices are fair or if the companies are profit gouging.

Transcript

00:00When her home and contents insurance went up 600%, Michelle Vanderlaan-Smith was shocked,

00:09especially as her building strata insurance had barely moved.

00:13Michelle Vanderlaan- The insurer justified the $5,000 increase by saying,

00:18my property's a flood risk.

00:20Michelle sought help from this legal centre.

00:23Michelle Vanderlaan- The pricing algorithms that insurers use

00:25are commercial incompetence. It is a total black box.

00:28Frustration over premium rises come as Australia's biggest insurers report bumper profits,

00:34thanks to years of premium increases and a relatively quiet year for natural disasters.

00:41Suncorp's profit jumped 52%, Insurance Australia Group 51% and QBE 27%.

00:49You've seen price increases well over probably three times the rate of growth of wages

00:55for the last three to five years.

00:57The ABC asked Allianz, QBE, Suncorp and IAG if they were price gouging.

01:03They all insisted premiums are based on risk.

01:07Consumer advocates though are calling for transparency.

01:10They want a national permanent industry-wide price monitor.

01:15I would rather see money being invested in risk reduction so that homes are built in safe locations.

01:21My name's Julia, how can I help you?

01:23Advocates say consumers have limited options for recourse from the financial ombudsman.

01:28AFCA says it doesn't have jurisdiction to look at whether or not an insurer has given you an accurate premium.

01:36AFCA ruled in Allianz's favour and wouldn't release the modelling used to justify the increase.

01:42It makes me very cynical.

01:44Michelle's new insurer is only charging her one-fifth of what Allianz was.

01:50So, let's do this.

01:51So, let's do this.

01:52Let's do this.

01:53Let's do this.

01:54Thanks a lot.

02:00!

02:04Fantastic.

02:07What are the steps?

02:14You feed your mind.

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