Motor Insurer pricing practice challenged
A motor insurance policyholder who disputed a 26% premium has won his case before the Australian Financial Complaints Authority (AFCA). The insurer was unable to provide reasonable evidence in support of the increase despite several requests for more information by the AFCA. The case highlights the importance of robust and defensible underwiring and pricing for Insurers. The practices should be easy to explain as Insurers should be expecting greater scrutiny as consumers demand more transparency. This may be increasingly difficult as insurers utilise more diverse sources of data, move to more granular pricing and use sophisticated optimisation models.
