Already a subscriber?Australian insurers lost more than $650 million on home insurance policies over the past four years and the industry warns premiums will continue to soar without better planning laws and investment in infrastructure to reduce the mounting cost of natural disasters.
The sharp rise in home and car insurance costs is one of the largest drivers of inflation, and persistent upward pressure on premiums is a major headwind for the RBA as it tries to get inflation, currently 3.4 per cent, back to its 2 to 3 per cent target range.At 16.2 per cent, annual insurance inflation is running at its highest rate in at least three decades, excluding the introduction of the GST. Insurance added 0.2 percentage points to headline CPI inflation in the 12 months to December.
“This phenomenon is already occurring in parts of northern Australia where, on average, home insurance premiums are almost double that of the rest of Australia,” Mr Kewin said in a submission to the parliamentary inquiry. Mr Kewin gave the example of the cyclone-prone town of Port Hedland in Western Australia, where 25 per cent of households were paying premiums more than four times higher than the average for the rest of Australia.
Despite the losses on home policies, the insurance industry as a whole remains profitable, recording a cumulative net underwriting result of $14.6 billion and an after-tax profit of $7.3 billion over the past four financial years.were the main driver of the recent poor financial outcomes in the home insurance product line.
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