Title : Home insurance premiums in north WA highest in the country
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Home insurance premiums in north WA highest in the country
A report released by the Australian Competition and Consumer Commission (ACCC) has identified north-west Western Australia as a hotspot for the highest residential insurance premiums, despite building regulations that demand mitigation against cyclones.
In 2016–17, residents of North West WA paid the highest average cost for home and contents insurance in the country at $2,700 — over double that in the rest of Australia.
The Northern Australia Insurance Inquiry has found that insurance premiums above $10,000 were common across northern Australia, particularly in Western Australia.
Strata insurance has been the most affected.
Premiums between 2007–2017 rose between 60 and 80 per cent in north Queensland and north Western Australia.
Analysis of the data has shown that for home and contents insurance, people on the coast of northern Queensland, far north Queensland, the Pilbara region, Darwin and Central Australia are paying the most.
"Between 2007–08 and 2016–17, average combined home and contents premiums, adjusted to account for changes in the sum insured, have increased by between 23 and 67 per cent in northern Australia, compared to just 16 per cent in the rest of Australia," the ACCC report said.
In a series of public forums held across northern Australia, consumers have told the commission that insurers have not reduced premiums in low-risk regions or rewarded them for securing their homes against damaging weather.
Many participants in the public forums were angry, emotional and some were brought to tears, even considering leaving their towns but with nowhere else to go.
"Some participants highlighted that insurance premiums are rising significantly and people and families are facing increasing financial distress," Ms Delia Rickard, Acting Chair of the ACCC said.
"Many residents consider there is little choice, especially in strata insurance markets and some regional towns."
Residents not happy
Participants stated the price increases were unjust and not understood, particularly where no claims had been made or where they were not living in a flood or cyclone-prone area.
In Broome and Karratha, residents have received renewal notices between $9000–$12,000 per year, sometimes higher.
Residents have expressed a desire to have their insurance premiums set at current market value rather than replacement value of the properties built during the boom.
While new buildings are being constructed with cyclone-proof building materials and methods, insurance premiums are not reflecting the change in standards.
Property owners who have gone to great lengths to secure their older homes against cyclone damage such as bars and tines through the roof are still paying the highest premiums or leaving their properties uninsured.
In February 2017, home insurance for Paul Jones in Karratha doubled to around $7,000.
"Most of the houses up here are all cyclone-rated," Mr Jones said.
"It costs a lot to build a house, it's phenomenal.
"We're paying more than what they are down south or over east."
In a statement, Campbell Fuller from the Insurance Council of Australia (ICA) said,
The ICA welcomes the ACCC's update on its Northern Australia Insurance Inquiry and will consider the report's details and preliminary observations.
We look forward to further discussions with the ACCC on why insurance premiums are more costly in remote and cyclone-prone regions when compared with regions and cities that are not regularly exposed to cyclones and that have greater access to trades, services and supplies at competitive rates.
The inquiry is timely, and the industry has provided extensive data and facts to the ACCC on risks, premiums and competition.
The insurance bill from Cyclone Marcus, which hit Darwin in March, has passed $62 million.
Last year, Cyclone Debbie caused more than $1.71 billion in insured losses, mostly in north Queensland. It was Australia's second-most expensive cyclone in today's dollars after 1974's Cyclone Tracy.
The ACCC said it would continue to investigate issues such as competition in the market, commission payments, how premiums are set and how mitigation initiatives were recognised by insurers.
They expect to update the report again in November 2018 with recommendations to government and industry.
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