Mainly it’s due to the inclement weather and a lack of insurers willing to compete in this space.
There are 3 main insurers who look at property risk above the 26th parallel – that is, in the top half of Australia and they apply a one size fits all rating model to all clients who fall into these areas.
While the north west sustains cyclones and flooding which generally lead to more expensive claims than say bushfires affecting properties and towns around Perth, recent claims in Queensland and the east coast as a result of cyclone Debbie are likely to cost around $2 billion – these are all areas that all fall into the 26th parallel. This means that premiums in Broome effectively subsidise in part premiums in the east.
While insurance companies need to remain profitable and pass their costs onto consumers, it doesn’t seem fair that clients in Broome and the northwest of Australia are penalised for higher claims sustained in other areas.
Part of our role as your insurance broker and client advocate is to ensure you’re not disadvantaged. Accordingly, we are continually in negotiations with the insurers to push them to understand the specific risks in Broome and surrounds versus other areas that fall in the 26th parallel. We believe insurers should determine a rating structure that is aligned with the actual risks that each of these areas face not a one size fits all approach. We will continue to do push for these changes.