Insurance premiums unlikely to inflate despite stormy weather

Insurance premiums unlikely to inflate despite stormy weather | Insurance Business

Insurance premiums unlikely to inflate despite stormy weather
Australian homeowners are unlikely to face sharp premium increases over the next 12 months despite a series of extreme weather events, it has been reported.

The Insurance Council of Australia (ICA) said the wild storms that hit South Australia in September are unlikely to spark big insurance claims because the total property damage was lower than expected, The New Daily reported.

The catastrophic June floods in NSW and Queensland, which generated around $400 million in claims, are also unlikely to cause big premium increases, Campbell Fuller, ICA GM of communications, said.

“Natural disasters over the past year are unlikely to have a significantly impact on premiums,” said Fuller.

“Insurers expect storms, floods, and other extreme weather events each year and other factor.”

South Australia, for one, would likely continue to enjoy the lowest average premiums in the country despite recent floods and power blackouts, market research firm Canstar said.

Furthermore, most brokers and market researchers said insurance premiums are unlikely to blow out in 2017, with premiums expected to either rise modestly or reduce in the year ahead, depending on the risk profile of the state and region, The New Daily said.

The positive outlook was caused mainly by the drop in the reinsurance costs borne by major insurers such as Suncorp, QBE, IAG, and Allianz in the last 12 months by as much as 20 per cent, the report said.

Since 2013, Australia has faced a decline in the insurance bills for natural disasters, which meant local insurers had to spend less for their reinsurance cover last year.

Mitch Watson, head of research at Canstar, said: “The cost of reinsurance has come down in the last 12 months. That is the main driver for why there are likely to be modest changes in premiums for home and contents insurance.”

Meanwhile, homeowners in the cyclone-prone regions of North Queensland have received premium increases in the 12 months to the end of June this year, dissipating much of the premium reductions they enjoyed in 2015.

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