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A preliminary report into insurance premiums across northern Australia has highlighted an apparent imbalance - with many residents facing rising costs that are out of sync with the rest of the country.
Late last week, the ACCC released its initial observations on the northern Australia insurance market following a public consultation and information gathered from insurers.
“Our inquiry aims to address concerns about insurance availability and affordability, promote informed and competitive insurance markets, and make a difference for consumers in northern Australia,” said ACCC acting chair, Delia Rickard.
“We have exercised our legislative powers to compel information from insurers about their products and gain unique insights that previous reviews of northern Australia insurance markets have been not been able to consider,” she added.
According to the early analysis, northern Australia makes up only 5% of the number of policies yet it accounts for about 10% of premium revenue.
The report also found that, between 2007-08 and 2016-17, average combined home and contents premiums (adjusted to account for changes in the sum insured) have increased by between 23- and 67% in northern Australia while the rest of the country faced a jump of just 16%. It was also revealed that, in 2016-17, the average annual combined home and contents premium in northern Australia was $2,000 – almost double the average for the rest of Australia. Strata insurance premiums in northern Australia were also found to be more than double the premiums in the rest of Australia.
The findings come after the ACCC held public forums in Townsville, Cairns, Rockhampton, Mackay, Darwin, Alice Springs, Broome and Karratha to hear directly from residents. In addition, the organisation also received over 280 submissions to its Issues Paper, released in October 2017.
“We welcome the effort made by local residents, property owners, consumer groups, local councils, regional development bodies, strata organisations and the insurance industry to contribute to our inquiry,” said Rickard.
“Some participants highlighted that insurance premiums are rising significantly and people and families are facing increasing financial distress,” said Rickard. “Many residents consider there is little choice, especially in strata insurance markets and some regional towns.”
Reports of renewal notices for home and contents premiums exceeding $10,000 per year were common, especially in the west. Residents living in strata situations questioned the commercial relationships between strata managers, brokers and insurers, particularly regarding percentage-based commissions.
While industry submissions suggested insurers are increasingly pricing premiums according to assessed risks at individual properties, many consumers claimed insurers are failing to reduce premiums in low-risk regions and do not reward property owners for steps they take to mitigate risk or improve the resilience of their homes.
