Australians Struggle with Rising Insurance Costs
The rising cost of living is making it increasingly difficult for Australians to afford basic insurance. Anna, a 51-year-old woman from Mitcham, Victoria, is one example. She has been referred to three specialists by her GP but cannot afford to see any of them due to the high cost of insurance. She currently spends close to $900 a month on all insurance costs and is considering cancelling her health insurance policy.
Official inflation data shows that insurance prices are rising over 16% annually, the sharpest increase since 2001. The Australian Bureau of Statistics attributes this to higher reinsurance and natural disaster and claims costs. This has made home insurance, in particular, unaffordable for many Australians. Financial counsellors report that many of their clients see home insurance as a luxury and do not have any form of household insurance.
The problem with not having insurance is that it leaves households vulnerable to financial ruin in the event of an unexpected event. Financial planner Simon Cutler says that despite warning his clients of the risks, they are cancelling their policies to save money. He also notes that more younger Australians are rejecting insurance altogether and opting for crowdfunding platforms like GoFundMe when disaster strikes.
Financial counsellors question the validity of the sharp increases in some premiums. The Insurance Council of Australia justifies the increases by citing the escalating costs of natural disasters, the growing value of assets, inflation, and the increasing cost of capital for insurers. However, many Australians are struggling to keep up with the rising costs, leaving them vulnerable and questioning the value of insurance.