Some general insurers charge customers up to 11% more for paying premiums by instalment rather than annually, and six of them are not clearly disclosing that cost to customers at renewal, according to a review by the General Insurance Code Governance Committee (GICGC).
The GICGC published the finding in a report titled “Clear costs at renewal: payment options and pricing transparency,” which reviewed the renewal disclosure practices of 20 insurers. Of those, eight did not charge more for paying by instalment, while 12 did. Of the 12, four disclosed the cost difference clearly; six did not. The report does not name the insurers reviewed, identifying them only by aggregate figures.
The GICGC’s expectations rest on Paragraph 21 of the General Insurance Code of Practice, which requires insurers, their distributors, and their service suppliers to be “honest, efficient, fair, transparent, and timely” in their dealings with customers. Against that standard, the report set out specific practices found among insurers that disclosed pricing clearly, giving compliance and pricing teams a working benchmark. These included showing the total annual cost under each payment option, stating the dollar and percentage difference between them, using plain language to explain why costs differ, and presenting payment options side by side so customers can compare them without performing their own calculations. Renewal notices that told customers only that annual payment “may” be cheaper, or that an instalment fee “may” apply, without quantifying the gap, were identified as insufficient.
Insurers that charged more for instalments cited a range of reasons: extra processing and administrative work tied to frequent payments, claims-cost patterns among instalment payers, lower investment returns when premiums arrive over time rather than upfront, higher rates of policy lapse, exposure to fraud, and consistency with pricing approaches used elsewhere in the industry. Across 29 products or product lines tied to the six insurers with unclear disclosure, 26 had at least a third of customers on monthly or fortnightly payments, and 11 had at least half, the report found.
Four of the six insurers with unclear disclosure told the GICGC they are updating their renewal notices; two said they have no plans to change current practices. The GICGC has not detailed what action, if any, it will take against those two insurers specifically.
Its 2024-25 annual report shows what escalation has looked like in other cases. The committee sanctioned two insurers that year for serious or systemic non-compliance. One was AIG Australia Ltd, over failures in complaints and claims-related communication that affected more than 700 customers; that case resulted in a compliance audit requirement, a $30,000 Community Benefit Payment, and public disclosure of the breach.
A second, unnamed insurer was sanctioned over claims-handling failures, including inadequate repair work and a failure to identify and address mould damage, affecting 35 customers; that case resulted in a $100,000 Community Benefit Payment to a fund administered by the Australian Communities Foundation (ACF). The same 2024-25 report recorded $2.9 million returned to 13,528 customers through insurer remediation linked to Code breaches more broadly, and noted the committee received 96 allegations of potential Code breaches during the year, down from 153 the year before. A separate GICGC Annual Data Report, covering the 2023-24 period, found an 18% rise in customer complaints, driven largely by disputes over motor insurance and premium increases.
GICGC chair Veronique Ingram said the gap between insurers that disclosed clearly and those that did not left no room for excuse. “Some do not charge customers more to pay by instalments at all. Others do charge more but are upfront about the difference. In that context, it is unacceptable for any insurer to leave customers without clear information about what they will pay,” Ingram said. The GICGC named “pricing transparency in relation to premium increases” as one of three monitoring priorities for 2025-26, alongside complaints handling and treatment of vulnerable customers.
Neither the Insurance Council of Australia (ICA) nor any individual insurer has issued public comment on the GICGC’s instalment findings.
Financial Counselling Australia and the Financial Rights Legal Centre described the instalment surcharge as a “poverty premium” in response to the GICGC report. Financial Counselling Australia’s coordinator of disaster recovery, Louise Hayes, said: “People who are already stretched should not be charged more because they cannot pay a full year of insurance in one hit.”
Financial Rights Legal Centre principal of policy development Drew MacRae said: “Consumers have been kept in the dark for too long on what contributes to their premium price and what they can do to reduce that price. For the insurance market to work properly, consumers need appropriate information to make an informed decision, and the practices highlighted are unfair and financially penalise the people who need a break the most.”
The GICGC said it will keep monitoring how insurers disclose payment-frequency pricing and will consider further action against insurers that do not adopt sufficiently transparent practices.
