Why Are Home Insurance Prices Set To Go Up

Many people don’t know but Home Insurance prices are likely to jump quite a bit over the next few months.

Having spent many years in the portfolio/pricing manager role in large insurers, my responsibilities in those days was to ensure that our insurance business doesn’t make a loss due to poor pricing decisions.

Pricing decisions that involved understanding the risk and particularly the risks associated with weather events which often have the potential to do quite a bit of damage to insurers.

Remember the bushfires from last year?

The period from November to March is the weather event period, floods, storms, cyclones and bushfires. This time of the year, insurers usually see the highest number of claims.

Insurers have barely recovered from the massive bushfire related losses and the bureau of meteorology are forecasting La Nina weather pattern which is associated with higher than normal rainfall and flooding.

You see, this means higher claims and to maintain profitability the only thing insurers can do is pass the risk on to the customers via increased premiums.

Covid lockdowns haven’t helped much either because there has been little preventative maintenance of properties undertaken.

Many people who have holiday homes in country towns have not been able to attend and conduct preventative maintenance.

Non essential Tradie work was stopped, like roof restoration and gutter cleaning etc.

All these can only add to the increased risk of claims and big brand insurers are busy crunching these numbers and probabilities.

They have no choice, because a 1% increase in claims volume can mean millions of dollars of claims expenses.

This is a good time to review your home insurance and move it to an insurer who’s bulk of profit isn’t dependent on the performance of home and motor insurance.

To discuss how to save money in the short term and which insurers you should consider for home insurance for a better bang for your buck, give us a call.