Home Insurance premiums have been fore-casted for yet another rise, due to insurance companies trying to recoup and rebuild from the dramatic loss of profits after the extraordinary string of disasters in Australia, New Zealand, and Japan.
With floods in both Queensland and Victoria, and the Earthquakes in New Zealand, Insurance companies are still feeling the effects of the horrific 2011 natural disaster season which cost the industry approximately $5 billion with approximately 300,000 claims cumulatively.
Some of the leading insurance companies of the countries including Suncorp, IAG, QBE and Wesfarmers have are all preparing to take hundreds of millions of dollars in losses to the company’s bottom line while also struggling with the the rising cost of reinsurance .
Wesfarmers have warned profits in their insurance division business is likely to take an extensive 70 per cent decrease. Robert Scott, the managing director of the company, continues to defend the industry saying it was “unprecedented” level of natural disasters combined with increasing reinsurance costs which has resulted in a need to increase premiums.
The Insurance Council of Australia has announced that households can expect up to a 15 per cent increase in home insurance premiums. Commonwealth bank analysts has commented on the rise stating “Rate rises are inevitable because losses in recent years have been much greater than expected. The costs to the insurers of meeting the claims and also insuring themselves, through reinsurance, have increased significantly and this will be passed on to customers”.
With thousands of the claims from last year still unresolved, the Federal government are still continuing working with industry bodies to improve regulation’s, and standard definitions for floods.
By Krystal Ayoub
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