Natural disasters and inflation forcing home and contents insurance to skyrocket placing more pressure on SA families

South Australian home owners have begun receiving their new premiums from insurers – and they contain some rude shocks.

South Australians are facing major hikes to house and contents insurance, with some homeowners reporting their premiums have jumped more than 40 per cent since last year.

Inflation and Australia’s recent natural disasters have created the perfect storm for the insurance industry.

Insurers paid out $36.5bn in claims last year nationwide, helping millions of customers recover from the unexpected.

But now, it’s the customers who are feeling the pinch.

One RAA customer reported a rise of 42 per cent on last year’s insurance premium.

Allison Potter, 55, of Strathalbyn, has been with the RAA for about 25 years and said her insurance premium had increased significantly since last year.

“It’s just insane,” Ms Potter said.

“My RAA payments were connected to my debit card and of course when the premiums were going up I wasn’t noticing it because it was coming out monthly, just automatically.”

The steep rise has forced Ms Potter to tighten her budget so she can afford the insurance.

“I’m just trying to make cuts everywhere to try to make the budget stretch,” she said.

Ms Potter said she had even cancelled her life insurance and instructed her husband to sell something in case of her premature death.

She said she chose to stay with RAA because “you get what you pay for”.

“RAA always delivers what they promise,” she said.

“I just thought, you know, just for the sake of saving a few hundred dollars, I think I’m going to stick with the devil I know - who really hasn’t been a devil - they’ve been really good to deal with.

“There’s no dramas with RAA, and they will be forthcoming with me, because that’s how they are.”

RAA Insurance chief executive Tara Page said the premium increases were affecting the entire industry.

“We understand South Australians are doing it tough at the moment, and as an organisation that exists solely to serve our members — any increases are the minimum possible to ensure RAA can continue to provide sustainable insurance products for all of our members,” she said.

“In some instances, properties with higher risk factors may experience larger than average premium increases.

“We’re working with industry and governments to help influence public policy to reduce pressures on insurance premiums in the future, including changes to planning codes and increased investment in risk mitigation.”

An Insurance Council of Australia spokesman said persistently high inflation and significant increases in reinsurance costs were continuing to increase costs for insurers into 2023.

“Home insurance is under particularly significant pressure – for every dollar collected in home premiums in 2022 insurers’ costs were $1.04,” he said.

“In 2022 alone, there were more than 300,000 disaster-related claims lodged from four declared insurance events across the country, costing more than $7b in insured losses.”