Home, contents and strata insurance premiums differ from property to property, and between different insurance providers. But which region in Australia largely has the most expensive insurance premiums?
An inquiry performed by the Australian Competition and Consumer Commission (ACCC) revealed that northern Australia, on average, has the most costly insurance policies. This region includes north Western Australia, the Northern Territory, and northern Queensland – all vital parts of our nation. The inquiry showed that in the last decade the cost of insurance in northern parts of Australia has increased at a more rapid rate than in any other region of the nation. There are reasons for this – as we will explore – but there may also be hope on the horizon, too.
Why is insurance more expensive in northern Australia?
The ACCC acknowledged that there are legitimate reasons for insurance providers charging higher premiums in northern Australia. Severe weather events are more likely to occur in the northern part of the nation, which can be costly for insurance companies to cover. Likewise, in some cases insurance isn’t as readily available in northern Australia as other regions, meaning there may not be the possibility of comparing various insurance policies for the best deal as is often the case in other parts of the country. Insurance coverage for remote areas is more costly to the insurance provider, hence their higher premiums.
Potential ACCC solutions
The rise in insurance premiums in northern Australia has seen an increase in uninsured homes. The ACCC, as a result of their inquiry, suggested there be subsidies and solutions put into place for consumers and insurance providers in this region to increase affordability. In addition, the ACCC has made recommendations after their inquiry that could lead to more availability of insurance in these regions. They are looking at solutions for the short- and long-term for consumers and insurance providers alike, and acknowledge that it is unlikely that anything will change without the introduction of some form of subsidy from the government. The ACCC has also recommended providing immediate relief for consumers that may be suffering due to the unaffordability of some insurance policies in these regions. Another call to action has been made around stamp duty on insurance, with the ACCC recommending it is either abolished, or changed to reflect the sum insured. Another recommendation will see insurance providers working more closely with consumers struggling financially, with deferring payments or offering various payment plan options.
Risk management
As we know, having an insurance policy in place is vital to the livelihood of consumers, and despite the high cost of insurance policies in northern Australia, the necessity of insurance does not lessen. By ensuring you have an appropriate level of cover in place, you will have peace of mind knowing you are protected against any risks to your home and/or contents. While these findings by the ACCC will hopefully bring about positive change in relation to insurance premiums in parts of the nation that on average have higher costs, it may be worth looking at your situation in the meantime to see if any improvements can be made to your insurance policy, or if a different provider may be better suited to your needs.
Reducing the risk of damage or loss
Another step that the ACCC has recommended is further work around building regulations that will aim to reduce the risk of damage and loss in areas of high risk, such as northern Australia. This would include regulations for building new, resilient buildings as well as retrofitting existing buildings for stability, and would encourage consumers to mitigate risks around preparing their homes for potential weather events such as flooding or cyclones.
Finding your best deal and checking your cover
In particular in northern Australia, but generally around the nation as well, the ACCC revealed that insurance premiums from different providers can vary a great deal for the same property. It is possible that some consumers may benefit or save from swapping providers, but shopping around for a better deal can be a challenge – particularly if you are in a remote or ‘high risk’ area, such as somewhere that is more likely to see severe weather events. Get in touch with your GSK Insurance broker, who will be more than happy to assist you in ensuring you have the best insurance policy in place for your circumstances and your region.
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