ACCC calls for insurance change
The ACCC has released a report saying Northern Australian communities need more affordable insurance.
The final report of the ACCC’s three year Northern Australia Insurance Inquiry say that home, contents and strata insurance premiums are, on average, considerably higher in northern Australia than the rest of the country, and over the past decade have increased at a faster rate.
Rising insurance costs are leading to higher rates of non-insurance in northern Australia, leaving more households and communities financially vulnerable to the impact of severe weather events, and potentially hurting the economic development of the region.
Insurers are increasingly assessing and pricing risk, based on a home or building’s individual characteristics and address rather than at a postcode or regional level, especially for cyclone or flood risk. This has resulted in very significant premium increases for some households.
“We know that there are real reasons for more expensive insurance premiums in northern Australia,” ACCC Deputy Chair Delia Rickard said.
“The risk of extreme weather is higher and it can be costly for insurers to service these regions. However, different insurers can quote vastly different premiums for the same property. While many consumers could save by switching, it is harder than it should be for consumers to shop around.”
“Our analysis has shown that, with the right actions, northern Australian insurance markets could work much better for consumers. We believe our wide-ranging recommendations would address many of the problems we have identified,” Ms Rickard said.
“Many of our recommendations, if adopted more broadly, could also benefit consumers and insurance markets across Australia.”
The ACCC has made 38 recommendations in this final report, including 11 new recommendations.
This includes a call for governments to provide immediate relief to consumers facing acute affordability pressures, and for subsidies to be used in preference to other measures such as government reinsurance pools.
Other recommendations include abolishing stamp duty on home, contents and strata insurance or, if it is maintained, that it be based on the sum insured of a property rather than the premium amount.
The report notes that the rise in premiums on insurance in northern Australia has resulted in significant windfall gains for state and territory governments.