Insurers put on notice

Resilience renos should earn premium discount: Jones

The Albanese government may look to send in regulators if insurers don’t recognise safety and mitigation efforts made by homeowners to make properties more resistant to catastrophic weather events.

Speaking on the sidelines of the International Congress of Actuaries, Assistant Treasurer Stephen Jones said the government was concerned about the continued premium price rises hitting households, but soundly rejected suggestions of subsidising at-risk and underinsured homeowners.

Mr Jones said “it makes little sense to mask the risk of climate change through subsidies for insurance if it encourages building the wrong buildings in the wrong places”.

“But the same orthodoxy has to be applied by insurers when they are pricing premiums for communities and households that have taken steps to mitigate risk,” he said on Monday.

“If they are lumped with the same premium as people who are not taking those steps, then that’s unfair. Not only is it unfair, but it’s also bad business and bad economics. It sends all the wrong signals.”

Mr Jones said insurers should respond to households reducing risk on properties.

“They ought to tell households in advance about things they can do that will bring their premiums down,” he said.

He said the government would look at the “best mechanisms” for ensuring insurers recognised improvements.

“I want to look at what the best mechanism is, I don’t say it shouldn’t be the ACCC, obviously they have a standing role in the economy for this sort of work,” he said.

“The first step is telling the insurers that it needs to be taken into consideration.”

Listed insurer QBE has warned it is facing spiralling costs from natural catastrophe events across its international business exposures. Fellow listed insurers Insurance Australia Group and Suncorp have both warned of similar issues, with premiums charged to customers racing ahead.

Allianz Australia chief executive Richard Feledy in April said the government should extend its Cyclone Reinsurance Pool to cover flood losses to support insurance cover for Australians.

While Mr Jones said the government did not support this move, he said they were pleased with the performance of the pool, which provides reinsurance for Australian insurers covering properties in the north of the country.