DRN-5851210

The complaint Mr and Mrs M think their home insurance premium was unfairly increased by Great Lakes Insurance UK Limited (“Great Lakes”) at renewal. What happened Mr and Mrs M said they received their renewal notice for their insurance cover, and their premiums increased from around £500 to around £800. Mr and Mrs M weren’t happy with the answer they were given when they spoke to their intermediary to understand the reasoning for the large increase in their premium, so they raised a complaint. Great Lakes intermediary said “l would like to assure you that we always present our best price first time. There are various reasons why a customer’s insurance premium may change from one year to another. We have seen increases in building materials and labour costs that are higher than inflation. These are costs that are more relevant to home insurers, for example when rebuilding after a fire or flood. ln addition, the number and cost of claims due to a water pipe bursting and flooding a home have increased significantly. Insurers continuously make changes to their pricing models, which can lead to significantly different views of risk over time, for example flood risk or issues with construction types. Our insurer, like most others, do not give specific details about such factors for individual customers. It is reasonable to expect the insurer to reassess the risk involved in continuing to offer you cover at each renewal which may result in premium increases or decreases. This process is owned, and the rates determined by the policy underwriter, Great Lakes Insurance UK Limited. The consideration of risk is how insurance operates and each underwriter approaches this differently. This is what contributes to home insurance being a highly competitive market. Furthermore, prices do not always increase because of something you have done. Insurance premiums are based on a wider number of shared factors and not solely on your claim history - such as, overall claims in a postcode”. Mr and Mrs M don’t feel they have been given a break down of their policy costs, or explained why their increase was so high. Mr and Mrs M have looked at a comparison website and they don’t understand why their costs are so high. Our investigator decided not to uphold the complaint. He didn’t find evidence the premium had been calculated incorrectly, or that Mr and Mrs M had been treated any differently to any other customer. Mr and Mrs M disagreed, so the case has been referred to an ombudsman. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Before I discuss my decision itself, I thought it was important to clarify why the complaint is set up against Great Lakes (the insurer) as opposed to Mr and Mrs M’s broker or intermediary. Mr and Mrs M’s communications were in the main with the intermediary.

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However, Great Lakes ultimately make the commercial decisions on the policy and set the price that is charged. So, Great Lakes are the responsible party for this complaint. When I consider a pricing complaint, my focus is whether Great Lakes has treated Mr and Mrs M in the same way it would have treated any other customer (new or old) who has similar circumstances. It's not our service’s role to comment whether we think a policy is cheap or expensive. Pricing of a policy is a key commercial decision for Great Lakes. It sets the risk it wishes to take which is outlined in its policy (what risks it will and won’t cover, outlining exclusions and limits to liability). It then decides what premium to charge for this risk. These risk factors and prices are dynamic, which leads to a decent amount of volatility in premiums from one year to the next. Again, to reiterate, these are commercial decisions an insurer makes, and the market- place is where Great Lakes’ assumptions get tested as customers choose which policies they think are good value for money. Great Lakes has provided me with some detail from their pricing models. I can’t share this as it’s commercially sensitive. I’ve checked this and I can confirm the calculations used to determine Mr and Mrs M’s premium are correct. Great Lakes has charged Mr and Mrs M the same as it would charge any other customer who has similar circumstances to them. Therefore, as I don’t think Great Lakes has priced unfairly, I don’t uphold this complaint. I appreciate Mr and Mrs M said they didn’t understand why their premiums had increased. Insurers are reluctant to share detailed information as the information is commercially sensitive. However, I have read the response Great Lakes provided in its final response letter. Whilst, Great Lakes hasn’t shared specific information it has explained in generic terms why the prices change. As Mr and Mrs M’s own circumstances haven’t changed significantly in the last 12 months (e.g. they haven’t made a claim, they live in the same house etc) then it will be generic factors that have caused the increase (as Great Lakes explained). These might be increasing numbers of claims and costs across the industry, or changes to the way Great Lakes has chosen to accept risk or price policies. I can see in the documentation that has been shared with Mr and Mrs M, that Great Lakes are clear that Mr and Mrs M should look elsewhere in the market place if they are not happy with the price that was presented to them, to see if they can get cover cheaper elsewhere. I’m pleased Great Lakes were transparent this option was open to Mr and Mrs M. However, as I don’t think Great Lakes has acted unfairly, I don’t uphold this complaint. I think Great Lakes explained at a high level some reasons for the change, such as increased material and labour costs (that are running higher than inflation). The number of claims have increased. And it has reviewed some of its approaches to risk. So, I can’t agree with Mr and Mrs M that Great Lakes hasn’t provided a general reasoning for the overall increase in premiums. I can also see Mr and Mrs M said the quotes provided by other insurers on the comparison site were similar, so I think this supports Great Lakes explanation the main changes were also common across the industry. My final decision My final decision is that I don’t uphold this complaint. I don’t require Great Lakes Insurance UK Limited to do anymore. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M and Mrs M to accept or reject my decision before 12 May 2026. Pete Averill

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Ombudsman

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