Big insurance cost rises on way
The Insurance Council of Australia has warned of unavoidable premium increases of up to 400 per cent in the wake of the nation's summer of severe floods and cyclones.
ICA's general manager of risk, Karl Sullivan, said reinsurance costs for Australian companies had jumped significantly this year after a string of costly natural disasters since 2008.
Mr Sullivan said many insurance policies covering residential property appeared to have passed on the higher costs with premiums increasing 20 per cent to 40 per cent in recent months.
He said similar increases were likely to spread but much bigger rises of up to 400 per cent were likely for strata insurance in high risk areas, such as cyclone-prone regions.
Hedland First National principal Morag Lowe confirmed some residential strata units in Port Hedland had recently been hit with hefty increases of up to 411 per cent.
Angry locals accused insurance companies of chasing lucrative mining wages, claiming their area was no more risky than the rest of the State.
Port Hedland resident Tony Vujevich said the 90 per cent premium increase to cover his Keesing Street unit was unnecessary because the building was designed to withstand category-five cyclones.
"When the big storms come through we don't get as much damage as you would in Perth or the South West," Mr Vujevich said.
"The insurers must think because of the mining boom we can easily pay this. It's ridiculous."
Insurance broker Chris Carr said this year's increases were the worst he had seen during two decades.
Insurance giant Suncorp said a 30 per cent jump in the value of claims in the year to June had put pressure on premiums.
"Insurance premiums in Australia have increased as a result of the succession of major claims events experienced in Australia and New Zealand over the last 12 months," a spokesman said.
"These events, as well as other events in the Asia Pacific region, have resulted in higher reinsurance which has in turn increased premiums in Australia."
Mr Sullivan said the adjustment in reinsurance costs was fair, given Australia accounted for 2 per cent of the global market but about 6 per cent of losses.
But he said governments could reduce premiums by mitigating the impact of natural disasters through more stringent building codes and better land use, such as prohibiting construction on flood plains.
