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Home Insurance Premiums.

Mar 5, 2013

Hail storms, wild weather, natural disasters and bush fires, the past year has seen premiums for car and home insurance rise by up to 30 per cent, says NIBA (National Insurance Brokers Association) in their July 2010 survey.

Soft Cost Increases for Business

While car and home owners are forced to dig deeper into their pockets to pay for the extra premium increases, businesses on the other hand were found to experience a lesser impact on theirs with cost increases of below 10%.

 

Why the Massive Hikes?

Many insurance policy holders wonder why these hikes have been put onto their shoulders; if you look at it, 30% increase in cost is big enough to be noticed by even the worst budget-conscious policy holder. Naturally, many question the need for these rate increases.

Fact is that according to the NIBA survey many insurers have been hit financially with premium payouts for the natural disasters we’ve had to deal with over the past year; the Victorian bush fires, massive storms in Perth and Melbourne earlier in 2010, floods in Northern NSW, and more. All of the above has seen a huge increase in insurance policy payouts, resulting in a loss of profit for the insurance companies themselves.

Back in May 2012, the Courier-Mail reported that Suncorp had seen an increase of up to 10 per cent for the cost of their home insurance policies. The report also stated that Suncorp was actively using new systems that allowed them to reprice their policies within a couple of days of a natural disaster.

Business Insurance – Not Affected by Online Competition

Noel Pettersen, NIBA’s Chief Executive told The Courier-Mail that “strong competition amongst underwriters” were driving prices of business insurance.

According to Pettersen, “Australia is fairly cheap compared to other parts in the world.” Business premiums had risen 1-9 per cent, mainly for commercial property, public liability and business interruption. Professional indemnity rates on the other hand were “flat after significant increases during the height of the global financial crisis,” Mr Pettersen stated.

He realises that there is an increased competition from online companies as they try to dominate the internet. However, Mr Pettersen doesn’t feel that NIBA has seen an impact from its online competition so far.


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