The consumer backlash to compulsory flood cover has spread to WA,
where some residents face substantial
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premium increases from insurers that have expanded flood cover.
Householders have told the WA media of contents insurance premiums up to seven times more expensive than last year if their homes are deemed to be at risk of flooding.
IAG’s WA subsidiary SGIO has included flood cover in all home and contents policies since January 9.
“The fact that a particular area hasn’t flooded for a number of years does not mean there is no risk of flooding,” an SGIO spokesman told insuranceNEWS.com.au.
He says flood cover is automatically added to most customers’ policies for “minimal extra cost”, but around 2.5% of WA customers have some flood risk and will pay a premium reflecting this.
“If a customer believes they have [flood risk] data that is more comprehensive or detailed than ours, they should contact us and we’ll review our assessment of their property,” the spokesman said.
The issue has mostly affected insurers such as SGIO that have made flood a standard inclusion in recent months. RAC Insurance has included flood cover for at least 15 years so has avoided the issue.
Brokers say they are able to counter some rate increases by arguing their clients are in a low flood-risk area, with some success.
EBM Insurance Brokers MD Jeff Adams told insuranceNEWS.com.au that arguing against the increases “can be difficult at times, time-consuming and counter-productive”.
He says rates are increasing by 5% in most SME classes and slightly more for householders and private motor because of past natural catastrophes, while premiums are increasing substantially where flood cover is provided.
“Following diminishing returns over the past few years, most insurers are now taking action that they feel will increase their profitability,” he said.
“Not that we would necessarily agree with some of these actions – in fact, we believe some of them will achieve the opposite result.”
Part1 Part2 Part3 Part4
premium increases from insurers that have expanded flood cover.
Householders have told the WA media of contents insurance premiums up to seven times more expensive than last year if their homes are deemed to be at risk of flooding.
IAG’s WA subsidiary SGIO has included flood cover in all home and contents policies since January 9.
“The fact that a particular area hasn’t flooded for a number of years does not mean there is no risk of flooding,” an SGIO spokesman told insuranceNEWS.com.au.
He says flood cover is automatically added to most customers’ policies for “minimal extra cost”, but around 2.5% of WA customers have some flood risk and will pay a premium reflecting this.
“If a customer believes they have [flood risk] data that is more comprehensive or detailed than ours, they should contact us and we’ll review our assessment of their property,” the spokesman said.
The issue has mostly affected insurers such as SGIO that have made flood a standard inclusion in recent months. RAC Insurance has included flood cover for at least 15 years so has avoided the issue.
Brokers say they are able to counter some rate increases by arguing their clients are in a low flood-risk area, with some success.
EBM Insurance Brokers MD Jeff Adams told insuranceNEWS.com.au that arguing against the increases “can be difficult at times, time-consuming and counter-productive”.
He says rates are increasing by 5% in most SME classes and slightly more for householders and private motor because of past natural catastrophes, while premiums are increasing substantially where flood cover is provided.
“Following diminishing returns over the past few years, most insurers are now taking action that they feel will increase their profitability,” he said.
“Not that we would necessarily agree with some of these actions – in fact, we believe some of them will achieve the opposite result.”
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