AFCA has rejected a complaint over increases in ‘level’ life insurance premiums.
In a determination issued 17 December 2025 – but published 18 March – AFCA considered a complaint from a policyholder who argued he had been misled into believing his premiums would rise only marginally. The complainant pointed to increases of 23% in 2020 and 49% in 2023 and sought a full refund of premiums paid.
AFCA found the insurer, Nippon Life Insurance Australia and New Zealand, was entitled to raise premiums, noting the policy explicitly allowed for repricing and that “level premium rates are not guaranteed and may change over time”.
…rules prevent it from assessing whether a premium increase is fair…
The authority said its rules prevent it from assessing whether a premium increase is fair in amount, unless the complaint involves misrepresentation, non-disclosure, or a breach of legal duty.
“Where a policy entitles an insurer to increase premiums and it has increased premiums lawfully and consistently with the policy terms, AFCA cannot review the fairness of the amount,” the determination said.
AFCA examined whether the product disclosure statement was misleading but concluded it adequately disclosed that premiums could change if the insurer adjusted its rates. It said the complainant’s reliance on a graph (see below) illustrating premium paths did not establish misleading conduct when the document was read as a whole.
However, the authority ordered the insurer to pay $750 compensation for non-financial loss, citing administrative errors including the temporary cancellation of cover, and a delay in removing an exclusion.
This is what is wrong with AFCA and insurers…. those increases are definitely over the top and not fair increases and happen over a period of 3 years…. the question should be are actuaries to blame, they obviously cant price a policy without misleading
Perhaps all consumer protection authorities need to be drawn into this…..ASIC, APRA, AFCA and the ACCC? So many wrongs.
Advisers were told to sell policies as 'level' premium and received training from life companies to promote as such ever since I can recall (over 30+ years). This seemed to be the case up to sometime around 2020, since then premium increase have been out of control and the only action from authorities has been to force life companies to replace the term 'Level' with 'Variable'.
Even worse for the poor existing policy holders – Life Companies have created 'new style' polices with 'different' benefits, meaning they still need to be underwritten, but overall reduced benefits that are cheaper allowing 'lower risk' policy holders to move to the new cheaper policies and isolating 'higher risk' policy holders into a 'higher risk' premium pool resulting in them being unfairly priced out of their policies. The fact that the risk premium pool is shrinking and policy premium rates are 'unsustainable' are partly of the life companies own design. This is not a case of 'read the fine print', it appears to be protecting profits at the expense of the most vulnerable consumers who should be protected from such unscrupulous behaviour.
Should also mention evidently ill-conceived LIF reforms that have clearly decimated the life insurance industry. The whole situation desperately needs to be sorted out and real solutions to protect consumers and re-vitalise the industry need to be found.
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