Inquiry into bushfires suggests risk reviews to keep premiums down
A newly released report on the NSW bushfire inquiry suggests better risk management to help keep premiums down, but does not address issues of standardisation in home insurance terms.
Risk management would help property and landowners review conditions, to see how likely or prone their area might be to bushfires each year.
According to the newly released independent report, 2,476 homes were lost during the 2019/20 bushfire season in New South Wales alone.
The report looks at how drought and severe weather conditions led to Australia’s worst recorded bushfire season. It acknowledges that climate change as a result of increased greenhouse gas emissions, played a role in conditions that led to the fires.
Subsidies to keep insurance premiums down
Recommendation ‘28’ of the report proposes that the government take measures to “protect, prepare and build resilience into existing communities.”
Suggested measures include the introduction of subsidies to encourage property owners to assess their own bushfire risk. Another is that the government works with the insurance industry, to ensure that every local development on bushfire prone land is prepared for future bushfire seasons.
Need for standardisation in insurance terms
On this, Mozo’s insurance expert Peter Marshall says, “Fire sounds fairly cut and dried, but when it comes to insurance, every insurer will have a slightly different definition. How each insurer defines the term will affect whether or not they will pay out.”
Marshall says that this lack of standardisation of simple terms such as ‘fire’ could leave some people covered and others not. Even when they have been affected by the same event.
One thing the report does not seem to touch on is the need for more standardisation when it comes to the definition of insurance terms.
“The problem with the standardisation of terms does not seem to have been addressed in the report, meaning people will have to work through the fine print of a policy very carefully,” says Marshall.
As an immediate measure, the report does mention a need for more consistency across legislation. However, it does not appear to touch on standardisation in insurance terms specifically.
Reviewing your insurance ahead of bushfire season
With bushfire season starting as early as July last year, now is probably the best time to review your home and contents insurance. Check through the product disclosure statements that come with your insurance thoroughly and if there’s anything you’re unsure of, call your provider and ask for more information.
If you review your insurance and you’re not too sure about it, you could even think about switching. Head to Mozo’s compare home insurance page for a list of insurers to get quotes from, or take a look at the policies on offer below.
Compare home and contents insurance - page last updated September 19, 2020
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