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.
Yes, the wording lets insurers reprice. But that argument skips the history. For more than a decade insurers sold level premiums on a single promise: pay more up front to lock in stability in the future. A premium that held its shape while you aged into the years you needed cover the most. That WAS the product. The extra cost you wore early was supposed to buy you something later. Come to find out, that something was a sinking ship.
Policyholders did their part. They kept the cover in force, sometimes for fifteen or twenty years, paying premiums well above stepped, on the understanding that the curve would flatten out and reward them for keeping the policy. Then base rates started climbing year after year. The gap to stepped started to narrow, or even vanish. Then these products get closed to new business, thereby creating the perfect premium spiral, where the long game they were sold never pays off, and the cover becomes unaffordable.
The only formal response so far has been to make insurers swap the word level for variable. That tells you the regulators agree the original label oversold the certainty. It does nothing for the people who bought the old promise in good faith and are still holding it.
A legal right to reprice is not the same as keeping the promise. The industry set the expectation. The life insured did everything asked of them. It is the insurers who are walking away from the promise.
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