No explanations for big home insurance hikes

When your home insurance company decides to drastically increase your premiums, it can feel personal. After all, you’ve been faithfully making your payments, and it’s you and your family’s most valuable asset on the line. Not being able to afford to insure it is potentially disastrous. Doesn’t your insurer have a duty of care?

The least they could do is explain why they have to charge you so much more. This is actually required under the General Insurance Code of Practice, which also mandates that renewal notices show the old premium next to the new one so policyholders can see the difference.

But recent research conducted by CHOICE and Financial Rights Legal Centre (FRLC) suggests that few insurers follow these rules. 

For a new report into home insurance premiums, CHOICE and FRLC analysed 52 home insurance renewal notices submitted by homeowners. The report, ‘Signal Failures: What are insurers telling us with their pricing’, details how three in four renewal notices gave no explanation for why a customer’s premium had gone up.

“Insurers know more about the risks facing our homes than anyone else, yet consumers are routinely given a premium increase without any meaningful explanation of what’s driving it,” FRLC’s principal of external relations and advocacy Julia Davis says.

Trust hits a new low

A nationally-representative survey conducted by CHOICE this year found that only 17% of respondents trust their insurance provider, the lowest figure since the survey began 11 years ago.

CHOICE head of policy Morgan Campbell says record-low levels of trust are not surprising, given what consumers have told us. “Homeowners are clearly frustrated with skyrocketing premium increases that arrive without clear justification”.

In recent years, we’ve heard from many homeowners whose insurance renewal notices have arrived like a bombshell, letting them know that their premiums have doubled, tripled or worse.

In one case, a homeowner was faced with the prospect of defaulting on their mortgage, since having insurance was a condition for the home loan. The region where his property was located had apparently been flagged as high risk on a database used by insurers, though his individual house faced minimal risk according to the local council. 

In April we heard from a homeowner named Michelle whose Apia premiums had gone up 42% over the previous two years. Since her renewal notices offered no explanation, she remains mystified as to why.

“There is nothing to justify the increase,” Michelle says. “No claims, no flood zone, no robberies in the area, and the property is well protected. It is now more expensive to insure my home than my health.”

Another homeowner that we’ll call Franklin has seen his AAMI home insurance premiums go from $2501 a year in 2023 to $4745 in 2025, nearly a 90% increase. 

“I shudder to think what my next renewal will be,” Franklin says. “At least $6000 I’m guessing, probably much more.”

Customers left feeling ‘trapped’

We also heard from Rachel, whose AAMI premiums went from $6132 to $8576 with her latest renewal notice.

“The house is located in an area with a 1-in-a-100-year flood risk. The property has not flooded in the 10-plus years I have been here, and I have never made a claim on this policy for any reason,” Rachel says.

But when she attempted to shop around, other major insurers including NRMA, Budget Direct, GIO refused to insure the address at all.

“I decided I’d have to make some adjustments to my excesses and drop the total amount of cover for contents, to make the policy affordable,” Rachel says. “I generated a quote with AAMI, and it was significantly cheaper, approximately $6000. I was surprised that a few small changes could make such a difference.”

“Then I generated a quote with exactly the same details as my renewal. Same value of cover, same excesses, same answers to all the questions. The quote was approx $500 less than the renewal price.”

The AAMI customer service rep Rachel spoke to was at loss to explain how this could happen.

“I feel I am trapped by this insurer, and that they can charge me whatever they want, knowing that no-one else will insure me,” Rachel says.

What we found

Code of practice violations across the board

As part of our research into this worsening issue, we asked a group of homeowners to send in their renewal notices so we could check whether they were compliant with the industry code.

We analysed 52 renewal notices and the results were not encouraging. Here are some of the highlights:

• 0% of renewal documents provided an adequate reason for the premium increase (75% had no explanation at all, while 25% gave generic explanations not specific to the property). 
• 9.6% of renewals didn’t mention last year’s premium at all.
• 92% didn’t include last year’s premium on the first page.
• 19.6 % didn’t show last year and this year’s premium on the same page (making comparisons harder).
• 0% explained how customers could reduce their risk or lower premiums.
• 0% gave any insight into how premiums were calculated.
• The average premium increase was 16%, though there were also a significant number of increases of between 25% and 50% and some as high as 100%.

Not clear and not fair

Along with our callout for renewal notices, we surveyed 831 home insurance policyholders and found that: 

• 71% did not understand why their premium had increased.
• 73% felt the increase was not fair.

Our recent investigation follows the findings of a national survey we published in 2023, which revealed that nearly nine out of 10 (87%) Australians had seen their premiums go up with their most recent renewal notice. For nearly a third (28%), the increase was substantial.

Quotes all over the shop

Rachel’s experience of receiving a different quote from her insurer using the same information her renewal notice was based on shows how seemingly random quote results can be. It’s an issue that calls into question whether insurers’ risk assessments are based on anything solid.

To further explore this concern, we did a deep dive into our home insurance reviews database and singled out 20 instances where quotes for the same address from different insurers were especially wide-ranging.

At one address in the Sydney area of Penrith, the minimum quote was $47,117 a year, and the maximum was $108,238.

In the town of McGrath’s Hill in NSW, the lowest quote for our test address was $1940 and the highest was $36,650, almost 20 times as much.

In the Queensland suburb of Garbutt (near Townsville), we generated quotes for a property ranging from $2591 to $33,103.

The other 17 addresses we checked had similarly diverse quotes from different insurers.

More transparency needed

Nationwide, home insurance premiums have increased by more than 50% on average in the past five years.

Many Australians in disaster-affected areas find they can no longer access or afford insurance, with the insurance regulator (the Australian Prudential Regulation Authority) estimating that climate-driven affordability issues may result in one in four homes being uninsured by 2050.

CHOICE’s Morgan Campbell says opaque premium increases give consumers little agency over their insurance costs, getting them no closer to making homes more resilient to increasingly frequent and extreme weather events.

“For consumers to make informed decisions and help identify risks, there needs to be greater pricing transparency,” Campbell says. 

The Insurance Council of Australia encourages households to undertake mitigation actions to reduce their exposure to extreme weather, saying that insurers can take these into account when calculating their premium. However, there is nothing that actually requires insurers to do this.

“Instead of incentivising consumers to make their homes more resilient to climate change, cheaper premiums are often only offered to new customers, or if you threaten to switch,” Campbell says.

With existing disclosure rules falling short, CHOICE and FRLC are calling on the government to amend insurance laws, requiring insurers to explain the factors behind the cost of premiums, and provide information about measures consumers can take to reduce them.

“We are not calling for exhaustive explanations,” FRLC’s Julia Davis says, “rather the provision of enough information for a consumer to understand the factors that led to the price they are paying and how these factors may have changed at renewal”.

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Andy Kollmorgen

Andy Kollmorgen is the Investigations Editor at CHOICE. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses. Prior to CHOICE, Andy worked at the Australian Securities and Investments Commission (ASIC) and at the Australian Financial Review along with a number of other news organisations. Andy is a former member of the NSW Fair Trading Advisory Council. He has a Bachelor of Arts in English from New York University. LinkedIn

Andy Kollmorgen is the Investigations Editor at CHOICE. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses. Prior to CHOICE, Andy worked at the Australian Securities and Investments Commission (ASIC) and at the Australian Financial Review along with a number of other news organisations. Andy is a former member of the NSW Fair Trading Advisory Council. He has a Bachelor of Arts in English from New York University. LinkedIn

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James Worsfold

James is a journalist with CHOICE's editorial and investigations team, decoding complicated consumer issues and reporting on how corporations and businesses affect the lives of Australians. He has previously created podcast series for We Are Explorers and Protect Our Winters Australia, and has published in Cosmos and The Citizen. James has a particular interest reporting on science, environmental and social issues, and was a recipient of a JEERA Ossie Award for his journalism. James has a Master of Journalism and Bachelor of Science in Physiology from the University of Melbourne. LinkedIn

James is a journalist with CHOICE's editorial and investigations team, decoding complicated consumer issues and reporting on how corporations and businesses affect the lives of Australians. He has previously created podcast series for We Are Explorers and Protect Our Winters Australia, and has published in Cosmos and The Citizen. James has a particular interest reporting on science, environmental and social issues, and was a recipient of a JEERA Ossie Award for his journalism. James has a Master of Journalism and Bachelor of Science in Physiology from the University of Melbourne. LinkedIn