Queensland targets homeowners put off insurance by premium rises
A North Queensland members of Parliament insurance action plan discussion has revealed that the system into insurance premiums and insuring properties in the area is set to undergo rigorous changes.
Cairns Member, Gavin King said that rising insurance premiums are a significant problem for the future development of North Queensland.
“The insurance premium crisis has reached a level that some homeowners are no longer taking out insurance on their properties because they cannot afford the dramatic rise in premiums,” King said. The insurance action plan calls for several proposals to look at the issue.
Proposals under the action plan includes the need for greater awareness and education for consumers, a call for the federal government to consider expansing the Australian Reinsurance Pool Corporation to segments of the market facing acute pricing issues, a central online database to assist insurers provide more accurate calculations, greater transparency and a call to review risk assessment methodologies used by insurers.
"Currently, insurance companies use post codes rather than individual property information to determine insurance premiums. The lack of a sophisticated system means that properties face premiums in-excess of the actual peril/risk of damage," the action plan reads.
It notes that in the same way insurers current take into account the detailed data on home security when calculating premiums (down to deadlocks and security screens), the same should occur for the resilience of individual properties to natural disasters.
"Once insurers install more sophisticated systems it is anticipated that consumers will be able to provide more detail, data and information about their properties to insurers so that their premiums can be priced fairly," it notes.
Calling for a review into risk assessment methodologies used by insurance companies they noted that the focus should be on strata insurance premium calculations and the driver behind increases. Three potential reasons included:
- A failure to consider changes in building codes
- The costs of reinsurance, historically inaccurate or inadequate assessment and pricing of risk
- The result of market forces, including heavy discounting.
A more rigorous analysis is expected.
