{"id":184102,"date":"2024-06-27T14:30:47","date_gmt":"2024-06-27T04:30:47","guid":{"rendered":"https:\/\/propertyupdate.com.au\/?p=184102"},"modified":"2024-07-06T00:23:50","modified_gmt":"2024-07-05T14:23:50","slug":"14-insurance-cost-increase-the-villain-behind-interest-rate-rise","status":"publish","type":"post","link":"https:\/\/propertyupdate.com.au\/14-insurance-cost-increase-the-villain-behind-interest-rate-rise\/","title":{"rendered":"14% insurance cost increase \u201cthe villain\u201d behind interest rate rise"},"content":{"rendered":"

Yesterday\u2019s inflation data revealed skyrocketing insurance premiums could drive the RBA toward a cash rate hike in August.<\/p>\n

This relentless increase in insurance premiums, well beyond increases in other cost categories, is an inflation villain that could see us all suffer from higher interest rates this year.<\/p>\n

If the government is serious about stemming inflation, then it's time they step in and address the insurance crisis.<\/p>\n

The ABS\u2019s latest Monthly Consumer Price Index Indicator shows CPI rose 4.0 per cent in the 12 months to May 2024.<\/p>\n

\"Insurance3\"<\/p>\n

A deep dive into the data shows insurance premiums rose a staggering 14.0 per cent during that time \u2013 the highest percentage gain across every expenditure class in the analysis.<\/p>\n

This earmarks insurance as an enormous and disproportionate contributor to inflationary pressures.<\/p>\n

Premiums are, quite frankly, out of control.<\/p>\n

People need to realise the fallout from rising premiums isn\u2019t isolated to policyholders.<\/p>\n

The impact flows through to us all in myriad ways.<\/p>\n

While an interest rate hike will be the most immediate widespread effect, rising premiums are devastating us in other ways as well.<\/p>\n

For example, high insurance costs are seeing businesses across the country having to reduce spending and staffing levels and, in some cases, close their doors altogether.<\/p>\n

This includes community facilities \u2013 small businesses such as restaurants, cafes, grocers, gymnasiums and many other operations that make up the fabric of our suburbs.<\/p>\n

Higher premiums also mean less disposable income for households, which only adds to the pain for local businesses.<\/p>\n

Higher insurance and interest rates result in less construction activity, so fewer homes are built in the middle of an accommodation crisis.<\/p>\n

\"Insurance2\"<\/p>\n

While several catastrophic events in recent years have contributed to greater premiums, there\u2019s no doubt insurers themselves are running rampant in what they charge.<\/p>\n

I know of several instances where runaway premiums have seen property owners choose not to insure their premises \u2013 both for residential and commercial real estate.<\/p>\n

This puts them one tragic event away from financial ruin.<\/p>\n

I\u2019m also aware of businesses who\u2019ve been refused cover, leaving them little choice between closing shop or taking on extraordinary risk.<\/p>\n

The solution<\/strong><\/h2>\n

The answer to explosive insurance premiums is multi-pronged.<\/p>\n

Firstly, I\u2019m calling for immediate regulation of the insurance industry.<\/p>\n

It\u2019s crucial government step in and stop insurers from quoting outrageous premiums that are decimating businesses, driving inflation and leaving Australians at risk of going broke.<\/p>\n

Owners must also ensure they are accurately insuring their properties.<\/p>\n

Be certain you have adequate cover, and that you are right across the terms and conditions in your policy.<\/p>\n

This is where insurance brokers are invaluable.<\/p>\n

Not only can they shop around to secure you the most competitive premium in the market, but they also simplify policy details and ensure there are no loopholes for non-payment by insurers in the event a claim is lodged.<\/p>\n