Fairfield mayor Frank Carbone slams looming insurance hike in Australia after LA fires

Aussies battling a cost of living crisis should not be footing the rebuilding bill for Hollywood celebrities who have lost their homes to LA’s wildfires, Fairfield Mayor Frank Carbone has claimed.

Exclusive: Aussies battling a cost of living crisis should not be footing the rebuilding bill for Hollywood celebrities who have lost their homes to LA’s wildfires, it has been claimed.

As an expert predicted that Australian insurance premiums could rise by about two per cent after the fires incinerated mega mansions in Los Angeles, a western Sydney mayor said it was not fair struggling families would be financially impacted.

Major insurer QBE confirmed it has exposure to the Los Angeles fires, which wiped out a $125m mega mansion that appeared in TV show Succession and Paris Hilton’s Malibu beach house, while Suncorp and IAG said it was too early to know what the impact of the fires on the insurers costs.

Paris Hilton’s home was destroyed in LA. Picture: Getty

The “most expensive home” in the Pacific Palisades, which featured in the hit TV show Succession, has been destroyed in the Los Angeles wildfires. Picture: Supplied

Fairfield Mayor Frank Carbone said it was an unfortunate consequence of a globally connected society.

“I think it’s devastating people have lost their homes worth millions of dollars … and quite simply we need more insurance locally so people in Sydney are not paying for what happens on the other side of the world when multi million properties get damaged,” he said.

“And most importantly, we just can’t afford it right now, people here cannot afford to pay higher premiums for multi million properties on the other side of the world.”

The damage from the Los Angeles fires, which have not yet been contained, could be as high as $30 billion.

Fairfield Mayor Frank Carbone. Picture: Richard Dobson

KPMG insurance partner Scott Guse said the Los Angeles fires would likely eventually impact premiums in Australia by about two per cent due to reinsurance, which is insurance for insurance companies.

Mr Guse said local insurers were required to be reinsured by global companies under rules set by the Australian Prudential Regulation Authority [APRA].

He said reinsurers would look at the cost of recouping what they would lose footing the bill for the Los Angeles fires by repricing what they charge Australian insurers, which would eventually flow on to premiums charged to consumers.

“So because they’ve lost a lot of money on those LA fires, when they come to provide protection for Australian insurers next year, they will look at the cost of repricing the cost of that protection,” he said.

“They’ll [insurers] will rerun their Australian models to see what the risks are, where they’ve increased, what they’ve learnt from LA and they’ll try to recover some of their costs that they’ve lost in LA as well.

“So the long and short of it is, we are affected. We will be impacted. I would expect there would be a couple of percentage increases in your home insurance policies next year as a result of the LA fires.”

A home is engulfed in flames during the Eaton fire in the Altadena area of Los Angeles County. Picture: AFP

Budget Direct and Medibank said they did not have exposure to the Los Angeles fires.

Bankstown pensioner Bona Smrdeska, 73 said the Los Angeles fires were terribly sad and said while she was unhappy with her insurer she said she needed home and contents insurance.

“We’ve got problems with insurance, we’ve got cover for the building but not cover for the roof, so for the body but not the head,” she said.

“I pay $1600 a year for insurance and they [insurer] said we can’t do this. So I am not happy at all but I have to have insurance just in case, you know.”

Originally published as Fairfield mayor Frank Carbone slams looming insurance hike in Australia after LA fires