Consumer advocacy group Choice has identified the Australian home and contents insurers that have implemented significant price increases over the past year. On average, home insurance premiums have surged by 16% in the last 12 months, but certain insurers, including Kogan, RAC, and Honey, have seen staggering hikes exceeding 30%.
According to Daniel Graham, an insurance expert at Choice, out of the 35 insurers analysed, 19 raised prices for at least 90% of their test addresses. Kogan experienced the most considerable increase at 37.9%, followed by RAC with a 32.6% rise, and Honey at 30.7%. A spokesperson for RAC noted that factors such as inflation in supply chains, higher claims costs, and increased reinsurance expenses, driven by severe weather events, were behind these substantial premium increases.
RAA, a South Australian insurer that raised its rates by an average of 27.1%, echoed similar sentiments, pointing out that growing extreme weather occurrences and repairing costs played pivotal roles in the price hikes. Experts at Choice highlighted that the increase in natural disasters in Australia is a significant contributor. A Climate Council report even predicted that 4% of Australian homes could become uninsurable by 2030, a staggering 90% in particularly vulnerable areas.
The report emphasised that insurers continue to seek profitability amidst these changes. Variables influencing insurance quotes include geographic location, security levels, coverage amounts, and chosen excess amounts, leading to fluctuations in premium calculations.
Despite the average home insurance premium rising by $359, a survey revealed that over a quarter of Australians lack home or contents insurance, and around 1.6 million households struggle to secure coverage.
To reduce premiums, experts recommend shopping around when policies renew to avoid a loyalty penalty and considering higher excess amounts. Each $500 increase in excess can typically lower premiums by about 10%.
Recently, the opposition leader Peter Dutton suggested a market intervention to protect Australians from rising insurance costs, while the Greens proposed eliminating stamp duty on home and car insurance. Greens senator Mehreen Faruqi remarked on the increasing unaffordability and unavailability of insurance as firms either withdraw or raise prices.
Interestingly, some insurers have raised premiums below the inflation rate. For instance, while RACQ had changes in the majority of quotes, its overall average increased by just 0.02%, and NRMA’s quotes rose by 1.7%. Conversely, premium insurer Guild managed to reduce its average prices by 15%, marking a positive shift for a previously costly provider.
In conclusion, as insurance costs continue to escalate, homeowners are urged to explore different options and strategies to manage their premiums effectively.