Due to the financial crisis and devastating bushfires home owners, drivers and businesses are facing the biggest insurance premiums rise in five years.
With costs rising 5-10 per cent experts are predicting that Victorians will pay an average of $47 - $100 extra for combined home, contents and motor policies.
The Herald Sun has reported that Richard Jeremiah Ibis World analyst has predicted the highest annual jump in about five years as companies tried to stem profit losses.
People living in risky areas and bushfire survivors would be hit hardest with insurance increases. The Black Saturday blazes payouts have reached $790 million. So far 6230 claims have been logged by insurers for damaged and destroyed properties and cars. Unfortunately about one in three of the ruined homes were uninsured.
Mr. Jeremiah further stated that more people were likely to abandon or downgrade insurance cover due to the increase in premiums. Melburnians are reportedly paying an average of $1031 for house, contents and car insurance, while country folk pay an average of $949. To make premiums more affordable there have been calls for stamp duty cuts which would coincide with the price rise.
The Insurance Council of Australia also wants to replace the fire services levy imposed on insured houses and businesses with a tax on council rates that is shared across the community. The recommendations will be made in a submission to the royal commission into the bushfires. Tax and levies consume up to 40 per cent of the cost of home and contents premiums in Victoria.
Mr. Jeremiah stated that the general insurance industry, which includes most kind of policies, made $3 billion last year. This amount will most likely reduce to $2.3 billion due to battered investment income and higher claims.
Stuart Alexander general insurance leader of Deloitte stated that a spate of natural disasters across Australia such as floods Queensland's Cyclone Larry, and bushfires had added to the pressure on premiums. Mr. Alexander stated that consumers would be wise to shop around for deals and to weigh up the level of service provided when choosing insurers.