Insurance premiums are likely to rise for all Australians in the wake of the Queensland floods, even in areas not prone to flooding, says Professor Michael Sherris of the Australian School of Business.
Widespread flooding in Queensland may end up costing the community more in increased insurance premiums, particularly for those who are currently uninsured.
Michael Sherris, professor of actuarial studies at the Australian School of Business, says premiums are likely to rise for all Australians, even in non-flood prone areas, because insurers pool risks by averaging losses across all policyholders.
"Catastrophic events deplete insurer capital and prices harden, especially as homeowners realise the need for insurance, increasing demand," Professor Sherris says.
The insurance industry is already reeling - 2010 was the second worst year for natural disasters since 1980. There were 950 incidents with insured losses amounting to some 37 billion dollars.
Professor Sherris believes there is a significant problem with under-insurance in Australia.
"Recent reports, such as one by ASIC that examined home insurance after the Canberra bushfires, show that ... as many as 81 percent of consumers have insufficient insurance coverage of at least 10 percent for the costs of rebuilding their home."
Read the full media release at the Australian School of Business newsroom.
Media contact: Professor Michael Sherris | 02 9385 2333 | m.sherris@unsw.edu.au