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Shop around for insurance – Crisp

Posted on February 10, 2012

MEMBER for Mildura Peter Crisp has joined the call for Sunraysia home owners to shop around for home and contents insurance if they are not happy with their current insurer.

Member for Mildura Peter Crisp

Mr Crisp, RIGHT, said the Nationals had met with one insurer, the RACV, following complaints from constituents about massive rises in premiums.

But the RACV is standing firm, including compulsory flood cover as standard procedure, not an option, as policies come up for renewal during 2012.

It is believed the RACV, along with other insurers, took a massive hit in claims following the disastrous floods in some parts of the State, including Sunraysia, early last year, and is responding accordingly.

Mr Crisp said from Melbourne this week he and his colleagues had been briefed in the Party Room in relation to rises in premiums, and their best advice was for people who were outraged at massive increases in insurance premiums to look for a better deal.

“Some insurers, such as the RACV, are unbending, but there are other companies who don’t have a compulsory flood component, or who can reach agreement with the policy-holder as to the level of risk,” he said.

“It’s just a matter of finding the right policy to suit an individual’s needs. People can either deal direct with an insurance company, or use a reputable broker to save them valuable time, effort and money.”

Mr Crisp quoted one case where a policy-holder hit with a $3300 bill for home and contents insurance got it down to $1900 through another company, and a second constituent whose premium was to rise from just over $500 to almost $3000 used a broker to find another insurer who quoted well under $1000 for everything but flood cover.

Speaking following a meeting between The Nationals the General Manager for RACV Insurance, Paul Northey, Mr Crisp said it was clear that some insurance companies, including RACV, had made a business decision to include flood insurance as a compulsory component of property and contents insurance.

Other insurance companies are offering clients the option of ‘opting out’ of flood insurance, he said.

“RACV said they have considered the possibility of extreme flood events in calculating their flood insurance premiums, however these events may occur as infrequently as once per 10,000 years,” Mr Crisp said.

“Whilst most damage is caused when floods go above floor level, RACV have also factored in the cost of claims for lower level floods.

“RACV have taken a business decision to make flood insurance compulsory to avoid uncertainty during the stressful time after flood and/or storm damage. They acknowledge that the flood data is of varying degree of accuracy and are committed to ongoing improvement.”

Mr Crisp said that based on this clear statement of RACV’s (and some other companies) position, the Nationals were advising people to attempt to negotiate a flood premium which they considered acceptable with their existing insurer.

If these attempts were unsatisfactory, then they encouraged people to ‘shop around,’ as other companies were offering optional flood insurance, and the option of accepting a higher excess to reduce premiums should also be explored.

“RACV and some other companies have made a business decision to make flood insurance compulsory, and have factored quite low probability events into the setting of their premium,” Mr Crisp said. “If clients, some of whom have been with the one company for many years, are not satisfied with the resultant premium, then they should ‘shop around’ for another insurer.

“I certainly wouldn’t be advising people to just accept the new cover, with its higher quote, and just write out a cheque. They might be able to save a significant amount of money by shopping around.”

Mr Crisp also advised that whatever final decision was made by the policy-holder, they should make sure that it is in writing, and that they understand the extent of the cover that they had bought.”

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