Insurance is perhaps one of those expenses you wished you could avoid. Sometimes premiums go up, and it can be painful to dish out the money without a quantifiable product given at the time. It can seem like one of those expensive necessities. Talk to your insurance broker Perth for information on insurance premiums and coverage.
But is your insurance premium actually expensive? What about compared to the rest of Australia? Better yet, where in Australia is insurance – on average – the most expensive?
The answer is…
That’s right, the region of Northern Australian typically has the most expensive insurance premiums. This region includes north Western Australia, the Northern Territory, and northern Queensland.
Premiums have risen faster in this region than anywhere else in Australia over the past decade – but the insurance providers aren’t just doing it for fun, there are reasons for such high premiums.
Why are premiums rising in the northern regions?
Put simply, severe weather events are much more common and more likely to hit northern parts of the nation. Cyclones, flooding, fires – these are all events which are very costly for insurance providers, and they happen more frequently in the northern region. Not to mention, the northern stretches of the nation are more remote, making it expensive for insurance providers to supply insurance to these areas. Fewer insurance providers supply insurance to these remote places – and therefore there is less competition, which leads to higher premiums. It is actually genuinely more expensive for insurance companies to provide insurance in remote areas prone to natural disasters, and this is reflected in their premiums.
The Australian Competition and Consumer Commission (ACCC) recently conducted an inquiry into insurance premiums around Australian, determining that the most expensive premiums are indeed found in the northern region. But they also have some recommendations to the insurance providers and government to alleviate some of the pressure put on consumers in these areas.
Hopefully soon, if the ACCC gets their way, we will see subsidies introduced to help increase affordability of insurance in the “high risk” remote areas in the north of Australia. Such high premiums have led to an increased number of uninsured homes in the northern region of the nation, and the ACCC is also fighting for immediate relief to consumers unable to afford insurance at these high premiums. A family unable to afford insurance can lose everything in a severe weather event, yet so many are finding the premiums too steep for them to afford. The ACCC wants to act quickly to lessen this burden.
The ACCC has also suggested change can come from the insurance providers themselves, where they are willing to work with their consumers struggling financially by deferring payments or offering various payment plans. Hopefully insurance providers will start to work with government bodies to manage subsidies for those struggling to afford insurance.
There is also a call to action around insurance stamp duty, and the possible abolishment of it – or at least changing it to reflect the sum insured.
While insurance premiums are indeed expensive, insurance is necessary – especially in these remote, high risk areas where there is an increased chance of damage to homes, contents and livelihoods. As part of their inquiry, the ACCC determined there can often be a huge difference in quoted premiums for comparable policies at the same property – so shopping around can help. In the more remote parts of the country, there are fewer choices for insurers, but it may still be worth having a look around to see if there is another provider that offers the policy you need, at a lower price. Don’t be afraid to ask the questions, and see if you can get a better deal elsewhere. It doesn’t always pay to be loyal – have a look at what other insurance providers are out there, and what their premiums are like.
There is more emphasis being put on building regulations to assist buildings and homes standing up against natural disasters and extreme weather events. The ACCC has recommended further work be done on regulations for resilient new buildings, and also on further stabilizing existing buildings. Consumers can focus on preparing their homes for potential weather events such as cyclones, with a potential disaster plan in place.
The bottom line?
Hopefully the ACCC will accomplish what it has set out to do, and get the government and insurance providers on board to begin reducing insurance premiums – or at least offering subsidies or payment plans to increase affordability. The northern region of Australia is a vital part of our nation, and each time a severe weather event hits, we see an outpouring of support from around the country. It would be great to see if the ACCC manages to achieve some of their goals, so we can start preventing massive losses from natural events, rather than just reacting when they happen. And while you may feel your insurance premiums are pricey – consider those in the northern region. And remember that an insurance policy is the peace of mind we all need, to know we are covered if something happens to our home and contents – and that we don’t have to lose our livelihoods.