Australia: Property insurance risk are being recalculated

Australia Flood Disaster 2011The flooding that struck Australia’s Queensland some months back was expected to have severe ramifications on the insurance industry. Now, officials are reporting that rates for homeowners are going to be raised by as much as 30%. Queensland residents have been receiving renewal notices for their policies’ premiums will be increasing. Many of these policyholders own property that survived the flooding without any damage, leading them to question the rate increase.

Insurers claim a myriad of reasons behind the rate increase. While the flooding is a prominent factor, they assert that local and governmental influences play a role as well. Overall, the cost of reinsurance for insurance companies is the likely culprit for the rate hikes, according to David Walker, Morningstar Insurance analyst. He says that the rising costs in Queensland could be a result of companies “recalibration of the risk” of flooding in the area.

Customers of Suncorp and Allianz, two of the biggest insurers in the company, have reported that their premiums rose by 32%. These steep increases have left some customers frustrated particularly as they come on the heels of news that these insurers are delaying claims.

Not all homeowners are experiencing such drastic rate hikes. Customers of NRMA, a auto insurer in Australia whose customers were affected by the floods, has only raised premiums by 0.14%.

Many of the property insurers in Queensland have faced sharp ridicule from the public and federal government over their handling of the disaster. These new rate hikes are unlikely to earn the companies any amount of favor given the circumstances.

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