RISKY BUSI­NESS

Con­sumer watch­dog re­port finds in­sur­ers us­ing price to de­ter cus­tomers in high-risk ar­eas to man­age their risk ex­po­sure.

Broome Advertiser - - Front Page - Tom Zaun­mayr and Jakeb Wad­dell

In­sur­ers are us­ing price to de­ter cus­tomers in high-risk ar­eas in an ef­fort to man­age their risk ex­po­sure, an Australian Com­pe­ti­tion and Con­sumer Com­mis­sion has found.

The ACCC re­leased the first in­terim re­port from the North­ern Aus­tralia In­sur­ance In­quiry on Tues­day, con­tain­ing 15 rec­om­men­da­tions for tax re­form, trans­parency and risk mit­i­ga­tion.

The re­port re­vealed de­spite a pub­lic be­lief high costs were be­ing used to sub­sidise other re­gions, most in­sur­ers were op­er­at­ing at a loss in north­ern Aus­tralia.

It also backed calls by the In­sur­ance Coun­cil of Aus­tralia for State Gov­ern­ments to scrap stamp duty on home, con­tents and strata in­sur­ance.

ACCC deputy chair­woman Delia Rickard said ad­dress-based pric­ing, ex­treme weather events and cost of re­build­ing all con­trib­uted to high pre­mi­ums.

“Usu­ally in the mar­ket, you ex­pect peo­ple to be com­pet­ing to get cus­tomers, to be re­duc­ing prices, im­prov­ing qual­ity,” she said.

“How­ever, par­tic­u­lar­ity in high-risk ar­eas, we saw pric­ing be­ing used to de­ter cus­tomers, to stop peo­ple rein­sur­ing and to not take on new busi­ness so they could man­age their risk.

“What we are hop­ing for is gov­ern­ments will talk to in­sur­ers about what mit­i­ga­tion works they think would be most use­ful, and, be­fore they in­vest in mit­i­ga­tion, in­sur­ers will es­ti­mate the quan­tity that would help re­duce pre­mi­ums.”

Ms Rickard said rec­om­men­da­tions made should be im­ple­mented im­me­di­ately.

In­sur­ance Coun­cil of Aus­tralia chief ex­ec­u­tive Rob Whe­lan said the ACCC’s find­ings were in line with rec­om­men­da­tions from pre­vi­ous in­quiries.

The in­quiry was launched in May 2017 and is in­ves­ti­gat­ing mat­ters such as in­sur­ance price and avail­abil­ity, mar­ket com­pet­i­tive­ness, key cost com­po­nents, reg­u­la­tory is­sues and prof­itabil­ity of pro­vi­sion of in­sur­ance in north­ern Aus­tralia.

The ACCC will spend the next year re­search­ing other places in the world with high in­sur­ance pre­mi­ums be­fore re­leas­ing its next in­terim re­port in Novem­ber 2019.

Sub­mis­sions to the in­terim re­port are due in April.

REIWA Kim­ber­ley branch chair­man Tony Hutchin­son said in­creased in­sur­ance pre­mi­ums in re­cent years con­tin­ued to put pres­sure on the bud­get of res­i­dents and busi­nesses in the north.

“The in­creases seem to have come af­ter con­tin­u­ing dis­as­ters and floods on the east coast,” he said.

“Some peo­ple have been forced to forgo or re­duce their prop­erty in­sur­ance due to af­ford­abil­ity.

“There’s is no doubt (there is) a lack of com­pe­ti­tion be­tween in­sur­ers and it’s in­ter­est­ing that the gov­ern­ment stamp duty and GST add a con­sid­er­able amount to pre­mi­ums and should be made ex­empt.”

Broome Cham­ber of Com­merce and In­dus­try pres­i­dent Peter Tay­lor said the ACCC in­sur­ance in­quiry con­firmed that pre­mi­ums in the bush were ex­or­bi­tant.

“There is no jus­ti­fi­ca­tion for a year-on-year in­crease of 300 per cent for one Broome res­i­dent af­ter seven years of no claims,” he said.

“In­sur­ance is about spread­ing the risk across many pol­icy hold­ers but it ap­pears in­sur­ance com­pa­nies only want to spread the risk across re­gional Aus­tralia in­stead of the whole coun­try.

“While the in­quiry’s in­terim re­port is wel­come, don’t hold your breath for an in­dus­try so­lu­tion.” Mr Tay­lor said loy­alty in the in­sur­ance mar­ket was over­rated. “Start look­ing for the best deals go­ing and don’t over in­sure,” he said.

“Talk to your lo­cal bro­ker, check com­par­i­son sites. There is no rea­son to set­tle on a 300 per cent pre­mium in­crease.”

Pic­ture: Jakeb Wad­dell

Re­cent floods and cy­clones have led to big rises in in­sur­ance pre­mi­ums in the Kim­ber­ley.

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