Unreliable electricity system prompts insurance cost surge

Unreliable electricity system prompts insurance cost surge

Unreliable electricity system prompts insurance cost surge Thousands of dollars in increased insurance costs are hitting small businesses in South Australia due to an unreliable electricity system.

According to reports, the state does not have a blackout compensation system, with the SA Power Networks (SAPN) posting meagre payments of between $100 and $605 for the latest blackout in December, and only to cover “inconvenience.”

There has been a rise, however, in the frequency of claims lodged against private insurers, said the SA Independent Retailers and the Hotels Association.

“Since the September blackouts the excesses have gone from $500 for a store to $5,000,’’ said SA Independent Retailers CEO Colin Shearing, as quoted in The Advertiser.

The hit comes as SAPN cuts down the $100 to $605 payments for the December blackout - it originally expected to payout on 99,000 out of a total 183,000 customers but this has been reduced to 65,000, The Advertiser reported.

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“In Sydney, venues claim for hailstorms and the excess and premiums go up - and in SA the problem is venues claim for blackouts and the excesses and premiums also go up,” said Ian Horne, GM of the Australian Hotels Association.

After the December blackout, Treasurer Tom Koutsantonis asked that an investigation be made on increasing the maximum payment of $605.

“These customers can rightly ask why payments are capped at the $605 rate, which is why I asked the independent regulator ESCOSA [Essential Services Commission of South Australia] to consider if that cap should be lifted,” he said.

But SAP spokesman Paul Roberts said the proposed changes would not create a compensation scheme.

“This is an inconvenience payment, not compensation,’’ he said.


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