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Tuesday 12 June 2018

The Australian Competition and Consumer Commission (ACCC) has called for submissions from the insurance industry into how insurance premiums are set in northern Australia.

“Our inquiry aims to address concerns about insurance availability and affordability, promote informed and competitive insurance markets, and make a difference for consumers in northern Australia,” said ACCC Acting Chair Delia Rickard.

In an official statement from the regulator, they outlined the key initial findings from the report, based on the preliminary observations:

  • Between 2007-08 and 2016-17, average combined home and contents premiums, adjusted to account for changes in the sum insured, have increased by between 23 and 67 per cent in northern Australia, compared to just 16 per cent in the rest of Australia.
  • In 2016-17, the average annual combined home and contents premium in northern Australia was $2000, which is about double the average for the rest of Australia. north-Western Australia was the highest, at $2700 per year. Strata insurance premiums in northern Australia are more than double the premiums for the rest of the country.
  • For home and contents insurance, the highest-cost regions appear to be concentrated along the coast of north Queensland, far north Queensland, the Pilbara, Darwin and central Australia.
  • The vast majority of home, contents and strata policies in northern Australia are supplied or underwritten by eight insurers through a total of 47 brands. All eight insurers operate in north Queensland, and seven operate in north-Western Australia and six in the Northern Territory. Only postcodes for Nullagine and Telfer in Western Australia, and Corfield in Queensland, have fewer than four insurers supplying insurance.
Rickard highlighted that insurance premiums were increasing significantly.

Industry has said the increased pricing of premiums was relative to assessed risks on individual properties. Yet, those in lower-risk regions are not seeing the same increases reflected in their premiums.

The regulator announced that they will assess the data that has come in from the insurers, with further reports due to be released in November 2019 and 2020.