Insurance customers hit
SUNCORP is slugging more than 400,000 home insurance customers with price rises of 10 per cent — far in excess of its competitors’ increases.
The average north Queensland policy holder will be forking out more than $200 more.
The alarm was raised by former Australian Competition and Consumer Commission chairman Allan Fels via his role as NSW’s Emergency Services Levy Monitor.
Professor Fels told News Corp Australia that Suncorp had increased premiums in NSW well beyond the size required to reimpose the ESL.
Industry sources then revealed that Suncorp had added about 10 per cent to its rates nationally. The rise took effect in mid March.
This information was shared with Prof Fels, who made further checks that confirmed it was correct.
With more than a fifth of the market, Suncorp is the nation’s second-largest home insurer after Insurance Australia Group, according to industry research firm Ibisworld.
It owns brands including AAMI, GIO, APIA and Suncorp. The 10 per cent increase is believed to have only been applied to Suncorp-branded policies.
Across the industry, increases of about five per cent had been expected.
Finance stock analyst, TS Lim of Bell Potter, said Suncorp was trying to expand its margins from about 10 per cent to 12 per cent. Increasing premiums was one of the ways it was trying to achieve the improvement.
For the southern half of Australia, the average annual home and contents premium is less than $1200.
It is nearly $2000 in north Queensland and about $1800 in the NT, according to a new ACCC report. In Brisbane it is approximately $1600 a year.
Brisbane-based Suncorp dominates the cyclone-prone north Queensland market, with twice as many customers in the Cairns area as any other home insurer, the ACCC report shows.
Asked specifically about significant price rises across the country, a Suncorp spokeswoman would only say it “regularly reviews the pricing of its products to ensure the sustainability of its operations, as well as its competitive position in the market.
“Insurance policy pricing is based on numerous factors including the risk and costs of natural hazards, as well as costs associated with reinsurance, materials and labour for home repairs,” she said.
Within home insurance, the cost of building cover has surged 154 per cent in the past decade.
The contents component is up 33 per cent. The average increase in all goods and services over that time has been 26 per cent.
Prof Fels said all insurers should put last year’s premium on renewal notices.
He said Allianz and IAG brands such as NRMA do, but the Suncorp stable does not. Such disclosure was recommended by a Senate inquiry last year.