Why are premiums rising?
It is an indisputable fact that insurance premiums accross Australia are rising.
Fundamentally, rising premiums are being driven by a sharp rise in claims volumes, higher claims amounts, and a substantial increase in the costs associated with meeting those claims.
Recent weather-related and other natural catastrophes in Australia and in other regions around the world are having huge flow-on consequences for the insurance sector globally. In just this year alone, cyclones, severe storms, floods and bushfires have ravaged many parts of Australia, leading to record claims levels across the nation.
Elsewhere in the world, major earthquakes have had devastating effects in both New Zealand and Japan, with parts of Japan also being destroyed by a tsunami, while tornadoes and severe flooding has impacted large parts of the United States.
Insurance companies are increasing their policy premiums in all regions and in most product areas to offset the sharp rise in the cost of reinsurance and in the direct claims being made against them, as well as the substantial increases in associated costs, including the higher costs of building materials and labout to carry our repairs.
Source: CGU