Analysts have signalled that insurance premiums could rise in 2009 and 2010 as a means for insurance companies to recoup costs incurred by the devastating bushfires across Victoria.
“As a result of increasing claims, it is common practice for an insurance company to increase premiums after a large disaster as a way to recoup some of their losses,” Lincoln Indicators chief executive and analyst Elio D’Amato said.
The bushfires in Victoria add to a spate of natural catastrophes that have occurred across Australia in recent times, and following premium hikes in 2008 people should expect more price increases in 2009 and 2010, D’Amato said.
IAG through its RACV and CGU brands, and Suncorp through its AAMI and SGIO brands, are expected to be the two most affected insurance companies due to their significant market share in home and contents insurance, D’Amato said.
Morningstar insurance analyst David Walker said IAG and Suncorp had measures in place to pay out the large number of claims, but said pricing would likely harden following the bushfires.
“With storms in southeast Queensland and floods in far north Queensland last year, it’s already turning out to be an expensive year for insurance companies,” Walker said.
The Insurance Council of Australia has said it will release general insurance industry statistics on the number of claims and insurable costs as they are collected.
As of 5pm yesterday, the bushfires across Victoria had claimed 131 lives and 750 homes in what has been dubbed Australia’s worst natural disaster to date.
Westpac, National Australia Bank, the Commonwealth Bank of Australia, ANZ, AMP, Bendigo and Adelaide Bank, and AXA Asia Pacific have pledged $5.2 million to those affected.
