Consumer Triumph: Insurer Ordered to Refund Overlooked Premium Hikes

The policy in question involved annual increases based on a stepped premium structure and automatic Consumer Price Index (CPI) adjustments. Despite the insurer’s claim that annual notices were sent via email for 2022 and 2023, the complainant insisted they were not received. Adding weight to the complaint, the insurer failed to provide evidence of these emails.

Up until 2021, the policyholder received her notices by post and was under the impression that this would continue. She had never engaged with the insurer's online portal, making the email-only approach problematic.

AFCA cited the policy documentation which mandates that a notice must be sent annually outlining premium and fee adjustments. The Life Insurance Code of Practice also enforces the obligation for yearly notifications. AFCA noted, "It is inconsistent with the policy terms, unfair and inconsistent with good industry practice for an insurer to increase premiums without informing the customer."

Echoing this sentiment, the AFCA concluded that, "the insurer should not have collected increased premiums from the date of the 2022 notice onwards."

As a result, Resolution Life Australasia has been instructed to refund the excess premiums collected since the 2022 notice, along with interest, and to provide a detailed breakdown of these calculations to the complainant.

The matter is further complicated by the fact that the policy was originally issued by a different insurer and has since changed hands and names a couple of times—transitioning in 2017 and experiencing another sale and rebranding in 2020.

The policyholder also contended that she never authorized the current insurer to collect payments via direct debit, a claim which AFCA dismissed by clarifying that the handover of the insurer did not nullify the existing direct debit authorization.

This case, first reported by the Australian Financial Complaints Authority, underscores the significance of transparent communications and the necessity for insurers to maintain meticulous records of client interactions.