Regions face insurance hit

HOMEOWNERS in the regions are already forking out up to four or five times the insurance rates as metropolitan centres and it could be about to get worse.

The cost of property insurance continues to rise in North Queensland as the region braces for another potentially damaging storm season.

It comes as a La Nina weather system, which typically produces more rain and cyclones, is declared and more insurers withdraw from the market.

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Mar14 22 19 14 14 13 23 20 15 31 19 12 garet Shaw said she was hearing reports from consumers of increases in premiums but did not know whether it was related to the La Nina.

“I have seen increases in premiums but we always see increases in premiums,” Ms Shaw said.

“The strata market is in such a mess we wouldn’t notice if it is being impacted or not.”

Strata applies to residential units paying as much as four or five times the rates of metropolitan centres, although some properties in vulnerable areas are not even able to access insurance.

Consumer watchdog the Australian Competition and Consumer Commission has been undertaking an inquiry into home, contents and strata markets in Northern Australia and found both consumers and insurers were hurting.

About half of the people surveyed reported feeling some, a lot or extreme pressure paying premiums, while insurers reported an average Gross

Loss Ratio (GLR) of 86 per cent in the 12 years to 2018–19.

This compared with a GLR of 60 per cent in the rest of Australia.

Last month, Brooklyn Underwriters – which entered the region in 2014 promising to help a “neglected” strata market – announced it was pulling out. “Due to a change in underwriting appetite in this sector, Brooklyn Underwriting decided to exit the strata market in Northern

Australia,” the company said in a statement. Last year there were losses and gains with Suncorp selling Resilium and ceasing to underwrite Longitude, while new player Sure Insurance entered the market.

Insurance Council of Australia spokesman Campbell Fuller last month said the withdrawal of an insurer from any market may be an indication that the risk exposure was high and the premium income was insufficient to be commercially viable.

But ICA noted the recent entry of a strata insurance provider.

“The availability and pricing of strata insurance reflects the age and design of the building, its location, claims history, exposure to cyclones and severe tropical storms, and its use (owner-occupier/longterm tenants compared with short-term holiday rentals),” Mr Fuller said.

“Though strata properties will withstand the impact of a cyclone and protect inhabitants, they often suffer extensive damage and require expensive external and internal repairs.”