The Australian insurance industry says that extreme weather, building inflation, soaring reinsurance premiums and state insurance taxes are the key factors that push up the insurance premiums.
Insurance Council of Australia CEO Andrew Hall speaking at a recent insight show said various stakeholders should collaborate to ease pressure on customers. Mr Hall said it is, however, not right to say that the rising prices are unfair and industry only works to generate profits.
Mr Hall said that while no part of Australia is uninsurable, pricing can of course be a barrier. He said the insurance sector has to partner with the government, banks and others to come up with a right, transparent and judicious plan for properties most at risk.
He said underinsurance is becoming a major problem for customers. Underinsurance is an increasing bottleneck and the industry has to work to make people aware that if the worst happens in this current day, what would it cost to rebuild the property.
Mr Hall also responded to criticism from political leaders, arguing the key issue is risk, not industry price gouging.
“We need to do something about the risk rather than ignoring it. Putting more homes on floodplains, ignoring improvements in building standards, and building back things – in particular in a flood zone – and hoping it all won’t happen again is not going to be the solution for our insurance sector.”