Understanding why Insurance Premiums change each year, and what you can do to ensure your insurance policy remains affordable.

If you have held the same insurance policy for a few years, you will know that it is normal to expect your premium to increase each year with inflation.

In the last couple of years, we’ve been seeing larger increases than ever before.

For those who have never made a claim before, it can be very concerning.  This article explains some of the reasons that insurance premiums increase, and some suggestions on how you can ensure your policy remains affordable.

Reasons why your premiums have increased

There are several reasons why your policy premium may have increased.

It could be because of your insurance history, or from changes to market conditions that unfortunately cannot be avoided.

Your claims history impacts your policy.

Gone are the days of claiming items that cost $200 to replace, with most of us having a minimum excess of at least $500. Insurers are wanting to change the expectations of insurance to only claim for major loss or damage.

While we understand that you take out insurance so that you can claim, having reoccurring claims will increase your premium on your following year’s renewal due to your risk being higher.

Why does your policy increase EVEN when you haven’t made claims?

Whilst it may feel like you are being penalised when you haven’t made any claims, insurers have a lot of behind-the-scenes expenses to account for. After a major loss event insurers evaluate the total amount of claims they have paid and adjust premiums across the board to support them if another major loss event were to occur.

Insurers withdrawing from the marketplace.

With insurers experiencing large claim costs some have made the decision not to offer insurance in the North Queensland region OR in some cases, not at all. With fewer insurers sharing the risk and associated costs, the insurers that remain must charge a premium to cover the gap in the market.

How to make your premium more affordable

Review your sums insured.

Your sums insured automatically increase each year within the limits of the Consumer Price Index (CPI). The Consumer Price Index measures the average costs of living in Australia and the rising costs of all expenses and your sums insured are increased to allow for this in the event of a claim. 

Higher excesses.

Your excess is the amount you have selected to pay toward your claim. By selecting a higher excess your premium will in turn reduce. The most important thing to remember when increasing your excess is ensuring you have access to the money to pay the excess in the event of a claim.

Property improvements.

For older-aged homes or buildings, insurance costs can be higher because of the expectation of maintenance and wear and tear. While insurers aren’t too worried about decorative improvements if you have recently had a new roof or had your property rewired or replumbed this is something that your insurer will consider discounting your premium for.

Multiple payment options.

Insurers understand how expensive insurance premiums are and so to assist, most insurers have the option to pay monthly at no extra expense. For insurers that do not have the ability to offer monthly payments, we can offer you a quote for Pay-By-The-Month (PBTM) using Arteva Funding.

Note: If you are funding Commercial Insurance, the interest can be claimed on your tax return.

Review your Policy with a Trusted Insurance Broker

Drop into our Townsville or Bowen office to speak with us about your existing insurance policy!

For more information, please contact us on 1300 268 376