Brisbane insurance premiums unlikely to rise after fires: expert

Australia’s peak insurance body has downplayed the risk household premiums will skyrocket in bushland parts of Brisbane in the wake of the national fire emergency.

A burnt house in Batlow, NSW. The Insurance Council says it is unlikely premiums in Brisbane’s bushland areas will rise. Picture: SAEED KHAN/AFP

Insurance premiums are “unlikely’’ to go up in bushland areas of Brisbane as a result of the national bushfire crisis, but homeowners have been warned to know their risk level.

The Insurance Council of Australia and a leading insurance broker both urged homeowners to make sure their policies included “force majeure’’ and homes were covered to full replacement value, plus 10 per cent.

ICA head of communications Campbell Fuller said while it was unlikely insurance premiums would rise as a result of recent bushfires, it was important for residents to safeguard against natural disasters.

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“There are potentially many households that haven’t purchased enough cover. Insurance needs to cover the cost of rebuilding and replacing,” he said.

“This is a timely reminder for residents to look at how they protect their properties both financially and physically.”

Insurance comparison website Finder meanwhile flagged potential future rises in at-risk suburbs.

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“Insurers regularly reassess how new risks will impact a specific area,’’ Finder insurance specialist Sophie Walsh said.

“Insurers had to reassess how they dealt with cyclone prone areas in northern Australia with cyclones Larry (2006) and Yasi (2011).

“The resulting damage saw a rise in premiums for Australians in those areas.’’

Ms Walsh said shopping around could save up to $1335 a year, but it was vital the policy covered key threats such as bushfire.

“It’s important to know the key threats you’re likely to face and whether your insurer covers you for those,’’ she said.

“Under insurance is also a big issue in Australia. Make sure your home insurance cover is enough to rebuild your home and replace everything in it.’’

Finance Brokers Association of Australia warned households to check insurance policies after the Insurance Council of Australia found more than 80 per cent of households had inadequate fire insurance.

FBAA managing director Peter White said policies should include force majeure coverage or protection against “inexplicable acts of God”.

“Households also need to ensure their level of coverage is enough to replace all assets damaged by a fire.

“Those experiencing hardship because of a fire should speak to lenders who are currently giving grace periods of up to three months for victims.”

An NRMA spokeswoman said it had not raised premiums and it was too early to determine any impacts on premiums in the future.

“We’ve received 3700 (bushfire) claims since September,’’ she said.

“Our focus is supporting our customers with temporary accommodation and immediate financial help.

Suncorp and RACQ said their immediate focus was on helping victims, but the RACQ said any mitigation action homeowners took could be taken into account.

Mr Fuller said state governments and councils needed to do more to mitigate risks associated with climate change-related disasters, and make insurance more affordable.

“If the risks keep going up the price will keep going up,’’ he said.

“There needs to be an examination of bushfire prevention methodologies in urban areas.

“And there needs to be an examination of how these (communities) can better prepare for the hazards and perils they face from climate change.

“We encourage the Queensland Government to help consumers with the affordability of insurance by axing the stamp duty on household and small business insurance. No part of Australia should be uninsurable and as competitively priced as possible.”

A report published in October last year on the climate change risk to Australia’s built environment estimates Brisbane has the second largest financial risk associated with climate change hazards in the country at $1.065 billion as a total annual cost of insured damage (assuming all hazards are insured).

The XDI report estimated Moreton’s risk at $385 million and Logan’s at $134 million.

More than $939 million in insurance claims have been made during the bushfire crisis across Queensland, NSW, Victoria and South Australia, but this was expected to increase as more claims were lodged.

To check whether you are in bushfire prone land check your local government’s bushfire overlay mapping, or download the ICA’s My Hazards app.