The episode of the Channel 9 Today show screened on Tuesday 10 January discussed the rising cost of insurance premiums. In September 2011, Whitbread provided clients with a brochure explaining why premiums were expected to rise and what they could do to ensure they were getting the best possible premium for their individual circumstances and risks. Here is an excerpt from that brochure:

Why are Premiums Rising?

In 2011, four natural disaster events in Australia and New Zealand were listed amongst the year's top 10 most costly world events.1 Whereas claims arising from natural perils like storm, fire, hail and rain had nearly doubled in the preceding year (from $1.18 billion in 2009 to $2.14 billion in 2010), by the end of April 2011 annual claims costs nationally had already exceeded $4.2 billion as a direct result of the year's extreme weather events.2

Increases in the number of claims and the cost of settling those claims (driven in part by rising construction and material prices) are all making the business of insurance more expensive.

Reinsurance costs for insurers are also rising. Reinsurance covers insurance companies to make sure they can honour all legitimate claims following extreme weather events (like the ones we’ve seen this year).

After recent events, reinsurance providers now see our region as a high-risk area for natural disasters. As a result, reinsurance premiums are increasing for Australian insurers on policies across the whole country.

Sources: 1 Munich Re; 2 Insurance Council of Australia

To read more on why premiums are rising please click here to download a copy of the brochure.

Please note that since printing this document in September 2011, the Fire Service Levy has again changed. The Fire Service Levy is as follows:

Householders & House Owners

Victoria  (Country): 35% (increased from 32%)

Victoria (Metro): 18%

NSW: 20% (reduced from 23%)

 Fire / ISR / Consequential Loss

Victoria (Metro): 44% (reduced from 45%)

Victoria (Country): 85%

NSW: 36% (reduced from 40%)