Why are insurance premiums so high for Aussie consumers?
A new report released by Victoria’s Fire Services Levy Monitor, Professor Allan Fels finds Australian consumers are in the “dark” over how insurance companies arrive at prices.
Fels has called for an overhaul of the way insurers provide information about premium prices, stating it should be transparent, as currently Australian consumers are not provided with easily accessible information about what is and is not covered.
The report found there is no information given about why you’re assessed as low, medium, high, or very high for risks like flood, bushfire and burglary, or the reason for premium price rises.
Information about what is covered in the insurance policy is also often buried in a Product Disclosure Statement that are typically over 50 pages long.
Professor Fels said the fact that insurance companies are more profitable than banks, means Australians “need to be more informed to bring about a more level playing field in insurance.”
Regularly reassessing your insurance options, by using online insurance comparison tools, will ensure you’re always paying a competitive premium.
“Insurance companies in Australia are more profitable than banks and this suggests an absence of effective competition. One of the things that would help drive effective competition is for consumers to be better informed.”
Fels recommended these measures for insurance providers to help improve “transparency”:
1. Explain premium price changes when policies are up for renewal.
2. Provide more accessible information about what consumers are covered for under a policy and what they are not covered for.
3. Explain how they assess an individual’s risks like bushfire, flood and burglary – eg low, medium, high, very high risk.
4. Clearly indicate any statutory charges (eg stamp duty, GST, fire services levy), detailing them separately to the basic premium cost in the quote or invoice.
5. Explain what additional charges might be incurred as a result of choosing to pay insurance in instalments.