ACCC finds northern Australian insurance costs soaring, recommends industry regulation
- An ACCC inquiry has found more and more people in northern Australia are going without insurance
- The watchdog says average home insurance premiums in the region rose by 178 per cent over a decade
- Its report has recommended a series of regulations to make the industry more consumer friendly
“It just keeps going up and up. It’s exorbitant actually,” she said.
Yearly building insurance price hikes have pushed up her body corporate fees, in a unit complex where many of the residents are pensioners or self-funded retirees.
Ms Shearer — who is the CEO of the Council on the Ageing NT — also regularly fields calls from seniors saying rising premiums are forcing them to make distressing decisions.
“It really is causing havoc,” she said.
“It really is a big decision whether to insure your home or keep your health insurance.
“We have been lucky with cyclones for a number of years, but we will get one and then those people with no insurance will be homeless, so it’s time to look at measures now to ensure people can insure their home.”
Darwin resident Jodie Went is one of those who has had to go without insurance and, living in a cyclone-prone area, that makes her worry.
“I don’t have insurance at all because I can’t afford it, and being a low-income earner, everything I own means something to me,” she said.
Some Australians pay double — but it isn’t price gouging
The Australian Competition and Consumer Commission (ACCC) has found the rising cost of insurance is forcing 20 per cent of people in Northern Australia to live without it — compared to 11 per cent in the rest of the country.
The rate of non-insurance is highest in northern WA at 40 per cent, followed by 26 per cent in the NT and 17 per cent in Queensland.
The commission’s three-year Northern Australian Insurance Inquiry report, published last week, also found:
- Since 2011, non-insurance rates have increased in Northern Australia by between 7 and 9 per cent — and that figure could rise as climate change causes more severe weather events
- Northern Australians are being slugged almost double for home and contents insurance (an average premium of $2,500 in 2019) compared to the rest of Australia ($1,400)
- Over the last decade, average home insurance premiums in Northern Australia rose by 178 per cent compared to 52 per cent elsewhere
But ACCC deputy chairwoman Delia Rickard said the inquiry also found the price rises were due to industry losses rather than price gouging.
“Over the last 12 years, insurers have lost over $850 million providing house and contents insurance in northern Australia,” she said.
The ACCC is now calling for a lot more pricing and product transparency to allow customers to compare like with like.
Moves to demystify the insurance industry
It has recommended the Federal Government legislate industry changes including mandating standard cover, providing simple key fact sheets, and standardising the descriptions of what is and is not covered.
“We want to make it easier for people to shop around,” Ms Rickard said.
“For example, in Townsville when comparing prices offered by two different insurers, we found a $2,000 difference in the quotes.”
The ACCC also recommended the Federal Government establish a price comparison website that includes every insurer.
Ms Rickard expected the recommendation to prompt “a lot of resistance” from the industry.
“But that, if it’s done well, will make a real difference in terms of finding the best deal in your area,” she said.
Calls to abolish stamp duty
State governments have long resisted another of the ACCC’s key recommendations: abolishing stamp duty on home insurance…
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