Brokers side with insurers on premium hikes

Brokers side with insurers on premium hikes | Insurance Business

Brokers side with insurers on premium hikes
Several broker readers have sided with insurers that are said to be increasing premiums in Far North Queensland so much that residents are at times finding it difficult to afford them.

Last week, after the Queensland Chamber of Commerce accused the insurance industry of “deliberately pricing themselves” out of the market, a number of brokers sided with insurers.

In comments posted on the Insurance Business form, online reader Bruce said: “Insurance companies can't be expected to keep forking out for homes that are in cyclone prone or flood prone areas and either of substandard construction or in areas where no flood mitigation works have been performed. Insurance is there to protect against fortuitous losses, not inevitabilities.”

Another broker, who claims to be based in Brisbane and have FNQ clients, said: “It is a bad business decision to have a lot of your risk in a really dangerous place, so I don't blame insurers for avoiding the area.

“Having insurance isn't a legal requirement, and insurers are businesses, not government charities. We shouldn't force them to take a dive so people can live in danger prone areas.”

Ian J added: “insurers cannot continue to rebuild property in an area that historically is subject to adverse weather.”

Insurance Business previously reported on broker Helena Blum’s personal sacrifice of lowering commissions to help clients. Many readers admired her compassion but were torn as to whether a legal requirement for insurers to provide cover is the solution.

However, there was some consensus on creating a disaster pool fund as a solution much like New Zealand.

“Australia needs to follow New Zealand’s lead (of 1946) and introduce a defined event disaster pool/levy, that works on a first loss type basis capped to a realistic level for residential property, which in turn will flow through to create more reinsurance capital for commercial risks.”

Others suggested GST and stamp duty exemption on insurance policies in nominated post codes and a joint arrangement between insurers in Australia to automatically assume a proportion of risk for nominated policies in certain postcodes.
 
 
6 Comments
  • Robert Cooper 2014-04-28 12:56:01 AM
    It is fine for Brokers to justify the higher risk nature of FNQ but many reinsurers are considering all the Queensland Coast high risk these days. The Storm and Tempest claims on the Sunshine Coast and Gold Coast are just as costly. It appears the competition from insurers is the only factor in keeping premiums down in South East Queensland, certainly not the risk.
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  • Helena 2014-04-28 2:33:17 AM
    For me, being able to insure your property, whether it's house or business is a basic need - just have to check out Maslow's hierarchy of needs to see that. I'd love to see the government drop GST and stamp duty on owner occupied property - I mean, we don't pay GST on bread do we? Just because it's an FNQ issue right now, doesn't mean it'll necessarily stay an FNQ issue - it'll be an easy template to apply into other regions and other areas. This is our industry, and in my humble view, we need to be more problem centred & not necessarily so much self centred & we have to be able to work towards being able to look for ways to address this over the long term, across different areas & for many events to come.
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  • Scott 2014-04-28 3:15:18 AM
    The most disappointing result from the collective comments made by Brokers is the lack of accurate knowledge applied to that region. I challenge any to define accurately the difference between Category 1 to Category 5 Cyclones. Then specify what real impact each Cyclone Category has to Commercial vs Residential infrastructure within the regions. Also taking into consideration building age and the building regulation applied. To simply comment - "they have Cyclones" is just so short sighted. Brokers need to closely monitor and educate themselves on the many works being performed by Councils, along with Government building regulations imposed over the past 2-3 decades. Refer to www.floods.org.au as a starting point. Accurate analysis of Loss Ratios to the region, will show recent premium increases are too high and very disproportionate to the actual losses occurring to the region. It is very disappointing that as a collective, Commercial and Residential property owners cannot turn to Brokers for support and resistance to the ever-continuing upward trend of premiums. Over the past 10 years, I have continued to build a strong portfolio of Commercial and Residential accounts from that region - based from Melbourne. Opportunities are there if Brokers focus on offering accurate support.
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