Bushfires, cyclones and floods as well as increased costs to repair and rebuild driven by price inflation, have seen household insurance premiums rise way above the usual annual increase in recent years. But now they’re adding to the cost of living stress experienced by many in the community.
A recent post on one local community Facebook page received over 70 comments with many sympathising with the original poster’s claim that their policy had “literally doubled in 2 years”. One respondent said their premium had risen 36% in just the last year and doubled in the two years previous to that.
This follows a report from last year that claimed 15 percent of Australian households, or 1.61 million homes, now face home insurance affordability stress, meaning their insurance premiums now cost more than four weeks of gross household income.
Contributors to the facebook thread said they had been told the 3960 postcode in particular has been assigned a high fire risk zone by insurance companies.
A University of New South Wales (UNSW) report on the matter of increased premiums said, “It is particularly significant for those in climate-prone areas. While climate change may not be the immediate driver, the growing number of people living in high-risk areas can increase the risk exposure and exacerbate the issue.”
Or is there something more sinister being played out by the insurers? The UNSW article mentions the practice known as “price optimisation”, whereby “sophisticated data mining tools” are employed “to adjust premiums based on factors unrelated to risk, such as consumers’ willingness to pay”. The practice is outlawed in some US states but remains legal in Australia.
According to the Climate Council’s own data, the Prom Coast News region’s susceptibility to bushfires is pretty much split down the middle, or from one side to the other on their map. While as little as 0.35% of homes are at risk in Sandy Point, those in Woorarra West, Turtons Creek, Boolarong, Mount Best, Wonga, Gunyah and Grand Ridge have a 100% rating for susceptibility to bushfire.
So, is there a way to reduce premiums? Well, inflationary pressures don’t look to be decreasing anytime soon and there is definitely no let up with regard to what mother nature throws at us.
The UNSW report suggests consumers discuss with insurers ways to reduce risks by way of “Implementing risk mitigation strategies”. Importantly though, they also say “shop around”.
“To avoid the “loyalty penalty” often caused by insurers’ price optimisation strategies, it’s important to compare policies and premiums from different insurers to find the best deal”, they added. David Barrett
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