The last few years have seen smaller, more manageable increases to insurance premiums, but a new report from JP Morgan and Taylor Fry forecasts sharper increases to our home and car insurance premiums this year.
The report is based on a survey of underwriters, brokers, and reinsurance companies.
Despite industry profitability increasing, insurers are encountering increasing costs, and are looking to pass those costs onto customers in the form of higher premiums.
— 7 News Sydney (@7NewsSydney) February 2, 2017
Average premium increase of 4%
Insurers are reportedly aiming to pass on an average premium increase of 4% in 2017, which would be more than double the current standard inflation rate of 1.5%. Last year saw a 3% increase.
Premiums on compulsory third party (CTP) insurance are expected to increase particularly high, with the report predicting a 13% increase to CTP premiums in NSW.
JP Morgan analyst Siddharth Parameswaran told Fairfax the drastic increase in premiums was a result of insurers incurring higher costs, with the report stating that:
- Claims inflation for home insurance had increased to 12%
- The cost of motor insurance claims had increased to 5%
“Profitability for the sector is improving, but it’s improving very slowly,” Mr Parameswaran said.
Tips on reducing the cost of your insurance premiums
You might not know it but there are several ways you can reduce the cost of both your home and car insurance premiums, and some of them don’t require much effort on your part! Here are our top tips.
Ways to save on car insurance
- Consider whether you could increase the excess on your car insurance. A higher excess means you’ll pay more if you ever need to make a claim, but if you’re confident in your driving abilities and have a clean driving history, this might be an easy way to reduce the costs of your premiums; and by quite a bit too, depending on how much you increase your excess by.
- Are there young’uns on your policy? Drivers under the age of 25 will greatly increase the cost of your health insurance premiums, so considering whether you really want your child on your insurance policy could be worth doing. You might consider either taking them off your own policy, or making them pay a portion of your premiums, reducing the amount you pay.
- Have you got a garage? If so, use it! Most if not all insurers will charge you more to insure a car that isn’t stored in a garage, because of the increased risk of theft. Even making use of a carport might reduce your premiums, thanks to reducing the risk of hail damage.
- Were you thinking about modding your car? Think again. Even if you’re not the hotrod type, minor modifications such as the addition of a bike rack or alloy wheels can be considered ‘non-standard modifications’ and subsequently increase the cost of your premium. Check with your insurer to see what’s kosher and what isn’t.
- Surf the web for your insurance! Many insurers these days can offer lower-priced insurance policies online due to the reduced overheads of online operation, with some offering up to $50 off and others offering a flat 10% discount. Use our website to compare policies and apply for your policy of choice.
Our final piece of advice would be to not just blindly renew your car insurance every year. You should constantly be searching for a better deal on your insurance policy and either switch to that better offer or get your current insurer to beat said offer. You’d be surprised what some insurers will do to avoid losing a customer.
Click here for more advice on how to save money on car insurance from CANSTAR. And here’s a list of high-tech innovations that may help you save on your car insurance premiums.
Ways to save on home and contents insurance
- Make your home as secure as possible. Your insurer will only charge you more for your contents if they’re not as protected as they could be. Be mindful of the different ways that a thief can enter your home, and prepare accordingly.
- Increase your excess. Everything we said above in relation to your car insurance excess applies here.
- See what your insurer is willing to do for you. As we mentioned, insurers hate losing customers, so if you’re a long-time customer with a clean, claim-free history, call up your insurer and make noise about how your premiums are too expensive. It’s more likely than not that they’ll give you a discount to keep you a happy little customer.
- See if you can bundle your financial products together. Some insurers will offer serious discounts on insurance if you hold multiple policies with the same insurer, such as home insurance, car insurance, life insurance, etc.
And as we said with car insurance, don’t just renew! Actively search for better, more affordable policies and switch to one if you find it! Click here for more detail on how to save on your home insurance premiums.