Bushfires, share jitters could spark insurance premium rises
Heraldsun.com.au, 28 May 2009
THE Black Saturday bushfires and share market jitters could trigger insurance premium rises of more than $100 on average home and contents policies in Melbourne, brokers say.
Home owners in fire-prone areas or suburbs with growing crime rates are in for rises of up to 30 per cent.
Increases will vary according to the risk profile of suburbs and towns.
An average policy to cover a $400,000 home and contents valued at $100,000 cost Melburnians $1084 in June last year, according to market research firm Cannex. That is likely to swell to more than $1200.
The Brumby Government is also increasing taxes on insurance policies.
One of the taxes, the fire services levy, will rise from 20 per cent to 21 per cent for metropolitan homes, and from 24 per cent to 26 per cent for rural dwellings.
The levy is calculated as a percentage of the premium.
Big insurers - such as Suncorp, CGU, Allianz and RACV - have signalled their intention to brokers to raise premiums after the insurance industry was hit by record claims for damage caused by floods, windstorms and bushfires in the last 12 months.
Insurers also have been hit by the global financial crisis, which has given them negative returns on investments.
Australian Broking Group managing director Robert Gilbert said he would not be surprised if home owners in the bush were hit with rises of more than 20 per cent.
"The industry as a whole made an underwriting loss last year and that will have to be addressed by the insurers repricing for risk," he said. "Most of our clients are going to be affected and people living in risky neighbourhoods will pay more."
Andrew Locke, of Adroit Insurance Group, said most Victorian households were likely to be spared the double-digit rises facing Queensland and NSW home owners.
He warned that insurers would impose extra costs to cover fraudulent claims.
"Economic downturns tend to be associated with increased fraud," he said.
Mr Locke said most car insurance premiums were likely to rise 2-3 per cent over the next 12 months.
The premium for an average Victorian driver aged between 30-59 was $678 last November, according to Cannex. A 3 per cent rise would increase that premium to about $700.
Early July is the busiest period for home insurance contract renewals. Brokers are advising clients on ways to reduce the insurance risks.