Premium pain for insurers

Kimberley property owners have told a Federal Government inquiry into high insurance costs in northern Australia that rising premiums are becoming unaffordable, forcing them to consider going without any cover at all.

An emotion-charged Australian Competition and Consumer Commission forum in Broome heard firsthand last week about what impact the increasing cost of policies was having on their pockets.

Several people argued they were paying top dollar in a region insurers fob off as high risk because of cyclones and flooding.

But Leonie Evans said the last major cyclone to hit Broome was in 2000 and environmental elements had become an excuse to hike-up prices, which were bordering on unaffordable, compared to other towns and cities in Northern Australia susceptible to the same conditions.

The property owner said cover on her Port Hedland property had risen by nearly $2000 within one year, without warning.

While her insurance had remained steady in Broome, Ms Evans said she had to “hunt around,” because quotes were exceeding $14,000 for cover in the area.

“These price hikes are killing people like me — you get no warning and that’s the horrible part about it,” she said.

Local strata manager Marianne Williamson said she believed high prices in the region were the direct result of circumstances in the Eastern States.

“When I started working in 2011, I noticed renewals were significantly higher than the year before,” she said.

“I think these companies were trying to take advantage of a new worker, but I immediately asked questions and it became apparent that insurance companies were using the Kimberley to make up their losses from the Queensland floods that year.”

Long-term Broome resident Chris Mitchell told the forum regional people not working for the government and receiving subsidies were shouldering a high cost of living and forking out more on every days costs, such as fuel.

Mr Mitchell said the added burden of high insurance policies was putting incredible pressure on those already under the stress of household budgets.

“I believe this has led to a lot of people not being able to afford insurance in Broome,” he said.

“This is all happening at a time our governments want people living in the north but there are no incentives, only increased costs.”

Several people told ACCC deputy chairwoman Delia Rickard many companies refused to insure properties above the 26th parallel.

One such local was Bill Jack, who said those who would insure his $350,000 Bilingurr property offered cover costing up to $17,000 a year.

Mr Jack said the estimated rebuild values insurance companies determine are “highly inaccurate and unfair”.

Broome property settlement agent Graham Glasson said premiums for his units in Kununurra had gone down as part of a general downward trend because the per square metre cost to build had decreased in the Kimberley and Pilbara.

The ACCC has geared its investigation around the costing methods behind home, contents and strata insurance and is currently canvassing public views before presenting its report to the Federal Government.

The law gives the ACCC power to get information from insurers that other reviews have failed to extract.