Lifting the lid on home insurance price gouging
By Joel Gibson
Ever noticed how you can compare the price of electricity plans at government or commercial comparison websites easily but not home and car insurance plans?
There are various websites that enable you to compare the prices and features of mortgages, credit cards and health insurance, too.
NBN and mobile phone plans? Easy. Even petrol prices are collected and published in some states.
But car and home insurance? To shop around and compare more than a handful, you must go to the websites of individual providers and get quotes by yourself.
Insurance pricing is a “black box”, and the industry has fought hard to keep it that way. It says comparison websites lead consumers to make bad choices because they are too focused on price and, if we all bought insurance based on price, it would be a disaster.
One of the industry’s least favourite people in recent years has been Professor Allan Fels, former boss of the Australian Competition and Consumer Commission and now NSW Emergency Services Levy Monitor. Before that, he held a similar position in Victoria.
In these roles, Fels has lifted the lid on insurance price gouging.
In NSW, his team compared what 13 insurers charged across 11 locations on a monthly basis and then analysed the data.
Revelations include big differences between the cheapest and most expensive insurers, what new and old customers pay, and what people in different postcodes pay.
For example, the team unearthed the shocking statistic that new customers pay, on average, 27 per cent less than longstanding, loyal customers for home and contents insurance.
The team expanded its analysis beyond insurance, estimating that Australians pay $3.6 billion more than we should across a range of household bills because of our loyalty.
Their final survey, obtained by The Sydney Morning Herald and The Age, contains some real gobsmackers for anyone who does not shop around for home insurance.
- In Hornsby, NSW, for example, policyholders who switch from the most expensive premium to the average premium could save $470 a year, while those who switch from the highest to the lowest price quoted would save about $1200 a year.
- On average, the most expensive home insurance policy at each location tested is more than twice the price of the cheapest policy. In Hinton, NSW, the most expensive premium is more than six times the price of the cheapest available.
- CommInsure, QBE, NRMA and OnePath were consistently the most expensive insurers in the 11 postcodes tested in March, while Youi, Westpac, Woolies and Allianz were consistently the cheapest…
This article is from the Sydney Morning Herald, you can read the full article here: