Supermarket Stranglehold; Lack of Competition and Rising Premiums Bad News for Insurance Policyholders
JUSTINE and Sam Withers bought their cheery yellow Queenslander, just a stoneas throw from the Brisbane River, not long after they married. It was the beautiful white window boxes planted with flowering petunias that started the love affair, with the view of the sparkling water from the raised balcony sealing the deal.
Mrs Withers was cutting the crusts off a cheese sandwich on January 12, 2011, when news came that the Brisbane River was expected to break its banks later that afternoon and residents were advised to seek higher ground. While Mr Withers grabbed their emergency kit and the manila folder with their important documents, she turned off the electricity and pocketed her motheras jewels. On a whim, just before running out the door, she reached out for their wedding picture sitting in a fading frame on the hallway table.
Sadly it would become the only real memento of nearly four decades of memories because when the Withers returned three days later, it was to a scene of pained devastation. Stinking mud caked every surface with the dark ring around the ceiling cornices marking the height of the wateras frenzy. Not a single piece of furniture was salvageable, not a picture, not even the cards made by their daughters in primary school that had been put on top of the microwave for safe keeping.
Worse was to come. Like thousands of Queenslanders affected by that catastrophe, their insurance policy had a gaping hole when it came to flood cover with their big-name insurer quoting a definition that excluded damage done by bursting rivers. The retirees had little choice but to dip into their reserves to make their home habitable once more but faced a further dilemma a few months later when the policy was due for renewal.
Suddenly the insurer, who was happy to take their money for 20 years, was no longer willing to accept their business and queries to other companies returned quotes too exorbitant to comprehend. For the Withers it was a case of being stuck between the devil and deep blue sea. They couldnat sell a no one was willing to part with good money for a property in a flood-affected area a but they couldnat afford to pay the high insurance premiums either.
It is a dilemma that has forced its way into the lives of hundreds of thousands of people across Australia in recent years a with Bundaberg Queenslandas Ground Zero in the January 2013 floods a as we lick the wounds of a debilitating run of natural disasters.
Following the floods of 2011, insurance premiums increased by as much as 175%, with companies citing the high payouts as the main reason for the push. The Insurance Council of Australia noted that by the end of June 2011, the industry had received 180,410 claims for extreme weather events with the Queensland floods alone setting insurers back $500 million.
But a report published by KPMG showed it was the reinsurers who bore the brunt of those costs, with the insurance industry actually managing to return a profit of $3132 million that year despite a number of catastrophes.
Critics say that continually rising premiums whether for homes, cars or health insurance is a result of the lack of any substantial competition in the market. There are some 128 general insurance companies in Australia. Seems a lot doesnat it but donat let the number fool you. …