AFCA Upholds Insurer's Right to Adjust 'Level' Premiums

In a determination issued on 17 December 2025 and published on 18 March 2026, AFCA addressed a grievance from a policyholder who experienced premium hikes of 23% in 2020 and 49% in 2023. The complainant contended that they had been misled into believing that their 'level' premiums would only see marginal increases and sought a full refund of premiums paid.

AFCA's investigation revealed that the insurer, Nippon Life Insurance Australia and New Zealand, was within its rights to adjust premiums. The policy explicitly permitted repricing, stating that 'level premium rates are not guaranteed and may change over time.' This clause highlights that 'level' premiums are not fixed indefinitely and can be subject to change based on the insurer's discretion.

Furthermore, AFCA noted that its rules prevent it from assessing the fairness of a premium increase amount unless the complaint involves misrepresentation, non-disclosure, or a breach of legal duty. In this case, the authority found that the product disclosure statement adequately informed the policyholder that premiums could change if the insurer adjusted its rates. Therefore, the reliance on illustrative graphs depicting premium paths did not constitute misleading conduct when the document was considered in its entirety.

However, AFCA did order the insurer to pay $750 in compensation for non-financial loss. This decision was due to administrative errors, including the temporary cancellation of coverage and delays in removing an exclusion, which caused inconvenience to the policyholder.

This ruling serves as a crucial reminder for Australian consumers to thoroughly review and understand their life insurance policies. 'Level' premiums, often perceived as fixed, can be subject to increases if the policy terms allow for such adjustments. Policyholders should be vigilant in reading product disclosure statements and seek clarification on any terms that may affect their premiums over time.

For those considering life insurance, it's essential to compare different policies and understand the nuances of premium structures. Engaging with independent brokers or using online comparison tools can provide clarity and assist in making informed decisions that align with one's financial planning goals.