Last year, my Home Insurance increase by 50%, from about $2000 to $3000.
This year, it will cost me about $3600 (increase of 20%).
The Home Insurance is mandatory with my Home Loan, I don't have a choice.
We put low levels of protection. That been said, it barely affects the premium asked by the insurer.
We also compared, we can't find cheaper.
Is that the new "normal"?
I expect every claim, no matter how spurious, or how excluded by the policy wording on a literal contract I refused to read, to be paid!
Not all insurers move in the same way
Oh but they are. No one is lowering prices. Some are just not raising them as much as others.
What was $600/yr policy last year is now $800, yet someone else might have only raised it to $700. So they look cheaper. But really still $100 more!
Yes we are and when an unfortunate even happens and time comes for a claim, they would find frivolous reasons to deny them
https://www.abc.net.au/news/2022-07-06/couple-denied-aami-ho…
"An AAMI spokesman said the couple's business was not the same as a lemonade stand and they had a registered ABN, signage, and a Facebook page for the business."
The also said they made $60-70 a week from the not a business.
This case is a little less black and white than it seems.
These people seem to have been running an actual business, not just a couple of chickens, for well over a decade - https://www.dairynewsaustralia.com.au/news/the-goog-the-bad-…
And they seem to have gotten a payout because they kicked up a fuss https://www.insurancenews.com.au/daily/egg-side-hustle-claim…
Businesses pay more for insurance. They seem to have not wanted to pay that, farms also have access to all sorts of tax advantages regular people can only dream of like income averaging and I would bet they claimed their insurance premiums as a business tax deduction while telling insurance something else. So everyone else is paying more and they come out ahead and our premiums go up.
Shop around, may not be the case for you. But I had my renewal from Budget and they jacked up the price from $1400 to $1650 from last year.
Did a quote with AAMI and it was $1360, so cheaper than the previous years premiums with Budget. I then did a quote with NRMA and it came in at $990! Exact same building and contents replacement costs and excess across them all.
NRMA seemed to also provide some extra cover for valuables over Budget too.
Thanks for the advice.
I just did a quote online with NRMA, it is the exact same premium.
Budget is among the worst. They even found themselves in court with ASIC suing them for unfair contract for their home insurance policy.
One of the worst PDS' I've read too.
Waste of money.
I went through this yesterday. Budget renewal was 2.5k up from 1k. Aami came in at $1300. Far better coverage too. Auto and general is the underwriter for all the "cheap" ones. Budget, virgin, ing and a dozen or so more. So they were all almost to the dollar the same.
Aami was cheaper, offered more like glass repair, free trades and flood cover. If I wanted flood cover budget would have been close to 3k
A big difference is that this year from some. Insurers asked about my home being cyclone rated. It's not obviously. Not where I live.
Budget has been the cheapest by far for the last 3 years, obviously everyone's situation of location will be different I guess.
I guess being the cheapest comes when low income areas get hit with cyclones and tornados (logan, northern gold coast) you get a huge amount of claims.
But are they ok to deal with when the time comes to make a claim?
@montorola: Depends on what you mean by ok? Did they pay a claim, yes. Were they OTT in checking every detail of the claim also yes. I know people who put a claim with their "premium" priced insurer and had money by the end of the week. I got paid by Budget for the tornado but it took months.
Lots of claims due to floods and storms.
The small number of insurers behind all the brands want to keep profits high.
They know climate change is making disasters more common and more severe.
So they raise premiums as much as possible.
Just looking at IAG:
When my insurance premium increased by 50% in 2023,
Their profits increased by 37%:
"According to Insurance Australia Group 's latest financial reports the company's current revenue (TTM ) is A$14.14 Billion. In 2024 the company made a revenue of A$13.70 Billion an increase over the revenue in the year 2023 that were of A$10.21 Billion."
It says it all
You said their profits increased by 37% but then quoted revenue without including expenses, so how did you get to profit?
But yeah, it does feel like we're getting ripped when we haven't claimed in years, however the are a lot of people with heavy claims from floods most years.
To cover 1 totalled house claim of $1m, you need 3,333 x $3000 premiums.
=$9,999,000
Looking at one year is often misleading, in insurance good years and bad years happen frequently.
A quick and dirty but often more comprehensive view is long term share price perforamce, and it looks crap. 183% increase since 2020.
I reckon its just having a good patch after a bad patch.
so does the question become "how much of an insurer's stock must you buy so that an insurance price hike gives you a sting in the wallet at first when it hits you, but a pleasurable effect on the back end when everyone else's premiums run to your wallet"? - like a bdsm relationships with an insurer
Profit for FY24 was up 8% from FY23
However a fairly well known fact is that insurance premiums vs claims runs between a 5% - 15% margin ie profit on premiums alone tend to be roughly 10% although varies significantly from year to year (some years premiums do not cover payouts). Most profit comes from investing the premiums in the period between payment of the premium and payment of the claim; so when the share and particularly the bond market does well (as it has been) then insurance company profits go up considerably as well.
So you cant look at profit levels and say 'that is due to premium increases' because a significant factor in that profit is unrelated to premium increases. eg across the industry as a whole, income from investments (after taxes) for 2024 was $3.0bn vs previous 5-year average of $1.03bn - so triple the average.
In 2025 already there have been almost $2bn in claims from Cyclone Alfred and the Mid-North Coast and Hunter Floods. 2024, on the other hand (the period being discussed in relation to profits), had no catastrophic events and total claims from major natural events were only about $550m - hence 2024 profits will not be replicated in 2025.
I'm a bit confused. You can just look at their financial report and see that Alfred and the Hunter flood's cost came in under what they had budgeted for and their FY25 profits are way up? Did you come here from the past or are you using an LLM whose context window is a bit behind?
@danwylie: you seem confused about the difference between 'budget' and 'cost'
If I budget $500 to repair an unexpected car repair and it costs me $450, I am 'under budget' but also $450 poorer.
If an insurance company budgets $500m for claims and only pays out $450m, then it is under budget but also has suffered a $450m hit to their profit.
@dtc: It wasn't unexpected for an insurance company to pay claims, it's more like you budgeted $500 for regular maintenance but it only cost you $450. If you don't think you're up in terms of money in the bank then you're welcome to send the $50 over to me.
Why torture a metaphor though? IAG forecast $1.4-$1.5 billion dollar insurance profit, they anticipated spending about $1.2b on natural perils costs, it only ended up costing them $1b, their insurance profits are up another $200m (potentially up as much as 25% from the previous year in total, not down, as you said they would be) and they upped their profit guidance accordingly.
All expenses are a "hit to profit", and IAG's expenses were substantially less than they anticipated, and as a result their profits are up. Insurance margins are up too fwiw, "towards the top end of 15.5-17.5%"
In the end you don't have to take it from me, you can read it in their ASX disclosures
Google revenue vs profit.
They know climate change is making disasters more common and more severe.
That's what they want you to believe…
Exactly. Profit driven BS not climate change at all.
First thing is to contact your insurance provider and see if there’s any discounts. I got my renewal this year, and it jumped a lot but after I contacted them, they found all these discounts they could add
Discounts or just increasing your excess/reducing cover?
Exact same cover, but reduced!
So last year was $2450
Renewal email was $2900
After contacting them $2401
"You will own nothing and be happy" doesn't mean abolition of private property, it means making things so expensive that you choose not to own them or have no financial capacity to.
Won't be happy though
There's chemicals and psyops for that though. I think they meant docile and not threatening to the ruling class rather than happy anyway.
Ignore the conspiracy theories. Increased insurance payouts has led to increased premiums. It isn't rocket science.
What drives claims? Good question. Climate change possibly. (Hard to say in the short term) Higher repair costs definitely.
More homes built in high-risk locations as we become increasingly desperate for housing.
I wouldn't explain 50% increase in one year
I had the same problem. Strangely enough, this year, it does make a considerable difference between one insurer to another.
In my case, moving away from Virgin Money to AAMI saved me $300 on a near identical coverage but slightly different excess.
Not by itself. I cannot speak to your particular circumstances. Shop around.
Have you seen how the cost of trade and materials have gone up?
Its also relative to your area if there have been an increase in break-ins, theft etc in you area that could impact your premium.
If no claims were made in a year, premiums would still go up.
That's how it works, your premium is based on a number of factors not just your claim history.
More homes built in high-risk locations as we become increasingly desperate for housing.
insurance companies should be more ruthless and decline offering insurance in more areas and totally remove flood or water damage cover from default cover
houses in bushfire, cyclone etc areas should be similar
some of us just want insurance to cover if someone breaks in and makes a mess of the place or a tree falls on the house or the house has a fire
Has the insurance valuation of your house changed, or the rate?
If you only have an amount, look for a linnk in your policy. It fits under full disclosure
If it's the valuation, demand their source.
Ask them if it is based on the squares of your house, and where they got the measurement, if it wasn't you. If it was you make sure that they haven't changed it. They could be using drones to recalculate.
You need a straight answer.
Then ask them where they get the price per square to create the valuation.
If you have a few previous years and everything isn't linear, do this. You may get nothing, but you won't be wasting your time
The cover is for the same amount, we haven't made any claim.
Yes, the value went up during the past few years, as all Sydney I believe.
It will be worrisome if my house value increases by 10%, my premium is increased by 10%, for exact same building…
it is not based on house value, it is based on cost to replace your house, which has gone up massively in the last 5 years.
Costs to build AND knock down only keep increasing as well.
How much you reckon to rebuild to same spec - $/m2 ? + knockdown etc.
Same reply as above, cost to rebuilt didn't go by 80% in two years.
Also, we have the exact same amount covered for the building.
So what was you cost - $/m2 to KDR back then vs what you are working on $/m2 to KDR now ?
It has in the past few years, Premiums don't increase in realtime.
I did a quote with Youi.
$2,600, so $1,000 cheaper than my current insurer.
I contacted my insurer, told them I wanted to leave.
They decided to match the quote, so I am staying with them.
$1,000 saved with one hour of work, not bad…
Alternative view:
Your current insurer tried to steal $1000 from you.
Exactly. I'd still leave.
Youi has pretty bad customer claim reviews…not sure who OP is with currently though.
@cloudy: They all seem to have bad reviews. Never seen an insurance company that people don't whinge about.
yep i don't even ask for a price match anymore, just grab a new quote online and leave. Way easier than talking to someone and about 5 mins work.
Great outcome OP!
Could you share the name of your current insurer - would be helpful to understand for eg who accepts Youi as a match when you threaten to leave. I would have thought insurers would just ignore price matches and say 'oh its not 100% exactly like-for-like' etc. I have a feeling will need to do this same course of action in a couple months when it's due
Youi…ohhh dear. Cheap and nasty.
You are very likely right.
We wouldn't use Youi for the car insurance, as the excess was way too high.
We control the safety of our house, we are not in a bush fire zone, we are not in a flooding zone.
For the car, you can always get hit by someone, even if you are a very safe driver. And it is never their fault…
You can't control everything lol
I have had a $65K claim from a busted water pipe, that was 15 years would be double now.
In the OP's post, they said "We put low levels of protection".
Assuming that this means the OP understates the value of their home and contents, this is a risky strategy.
Let's say they understate by 25% - in the event of claim, the insurer might invoke their 'underinsurance' provision and only pay 75% of the claim. For example, the OP insures a $1m home for $750k and later makes a claim for $500k - even though the $500k claim is less than the $750k amount insured, the insurer is entitled to reduce the payout to $375k because the OP has underinsured by 25%.
I just would like to clarify that I meant, the cover we chose is just enough to rebuild.
Low as minimal.
We put low levels of protection. That been said, it barely affects the premium asked by the insurer.
Since it barely affects the premium, there’s no point in risking being underinsured.
That should be criminal. Super dodgy, yet I understand is standard, practice.
You could remove one bedroom and one bathroom from your house. This will reduce your house's value, and the insurance will be cheaper. On the other hand, this could be inconvenient for the person who sleeps in that bedroom and the people who use that bathroom.
Insurance is a scam. There has been lots written about this.
play around with the building value and excess.
my current premium is approx. 10% less than previous year because I lowered the building value, and increased excess. I'm with budget direct, both house and car insurance.
my parents played that game. Then when their farmhouse burnt down they found the insurance was inadequate to rebuild. house building costs have been going up considerably, I am on the pointy end of that at the moment as I building. It has been a common problem that many people have underinsured as they are just not aware of how significant the cost increase has been to rebuild.
Yes, by increasing the excess, we lowered the premium.
It also means we will be doing no small claims, it is only to protect the house in case of catastrophic event.
For small issues, you just pay or do the repair.
I got rid of the "accidental breakage" cover this year. If I smash a window etc it's going to be cheaper to replace it than the excess or rise in premium.
Has the area been redefined as being at risk, e.g for flooding? The insurance money is considered a pool by the funds. We have seen some more extreme weather occurrences leading to larger payouts.
Try to get quotes from as many groups as possible and ask questions about the premiums.
No fire zone, and no flooding zone.
From that perspective, the house is very safe.
That will help looking for alternatives. A few councils have rezoned parts of their areas so you might want to confirm.
As mentioned by a post earlier,
Insurers are likely to make you pay more if the value of our property is higher.
The value of our house noticeably increased after COVID.
This is one of the reasons inflation is so damaging as it's essentially a green light for companies to price gouge. i.e we expect prices are going up and it becomes readily accepted regardless of any actually increase in costs on the suppliers end.
Higher than average price increases in the contruction sector are largely claimed as the cause but the insurers are just growing their margins. This is a free economy, there's no way around it.
Alas the only solution is to perhaps switch to a home loan where it's not mandatory t be insured (if that seems like a good idea regardless being it's so much of your net worth) or hunt around and go with lower value for house or much higher excess with non-essential stuff/cover removed e.g I am with Allianz and had flood cover removed as we are on top of a hill.
Its does suck but many sectors of the economy have done this - insurance is just one of them, it's not a Govt matter - its capitalism at work unfortuntately. Hope you can find a decent provider at a decent rate. :-)
Yes, this is exactly my experience. I'd include "loyalty tax" into "price gouge" as well. I had been paying the insurance companies "inflation" for years like a chump. It wasn't until I started comparing quotes that I realised that the loyalty tax was included in the definition of inflation. After removing the loyalty tax, the same company was still the most competitive. But it seems OP is already aware.
Flooding, more intense weather, more claims, higher materials cost, higher labour cost, higher temporary accomodation costs…
I've heard of cases where insurances will just payout the sum insured of 600K or whatever instead of sticking their hands in and directly getting a house rebuilt… especially in the flooded suburbs cause by the time they get their surveyer/inspector out, knock the house down, and build the house up, it'll be years later and costs would have doubled coupled with years of accomodation fees.
Insurance, my favourite subject. Here are some thoughts:
Cheers.
Good summary, thanks.
I work in insurance and I couldn't have said it better myself :)
Thank you! Very helpful
The one that gets me is my car insured for market value went up $200 this year, even though the market value goes down every year. Naturally I shopped around, and I still wasn't able to find a cheaper quote.
I can't help but feel like insurance companies are seeing the writing the on the wall (in combination with chasing every increasing profits). Things are only getting crazier out there, and they're bracing for it.
Yes, it was amusing changing from a car worth $5000 and buying a $33000 vehicle to replace it. My insurance costs went down, even though the new car has far more tech and is more powerful.
Same! Cheaper insurance for $46k 2025 car than 2015 5k car.
this! I couldn't believe seeing my higher renewal on something that goes down in price, a lot, each year!
Expensive insurance has nothing to do with recent claims/floods/storms, etc. It is nothing but greedy 'execs' wanting more money for nicer holidays and bigger houses for themselves! All they are doing is playing the 'inflation' blame game to up prices.
The excess can make a huge difference to the premium. I have a 5k excess for my home insurance and about 1k for contents as we're a very low risk (no claim in 20+ years). Saves roughly 25% p.a. compared with standard excess with my policy.
This
Not a financial advise. Higher excess may reduce your insurance premiums materially over time. Speaking from personal experience, I’ve consistently chosen the highest excess option for vehicles and home insurance for last many years. Back-of-the-envelope calculation suggests I’ve saved >15K in premiums during that period if I would have chosen more popular/default excess options. Even if I had filed one or two claims, I probably would still be ahead - luckily no claims.
A different perspective. Having a higher 5K excess would probably encourage me to avoid claiming for an incident if were to occur (may be damages upto $7-8K), which may help preserve my NCB and avoid paying more on renewals. Again this damage threshold is very individual to me but is definitely influenced by the excess amount.
Disclaimer - This is not an insurance advise as it is my personal experience and everyone's circumstances are different.
A large portion of this is the rising cost of construction. rebuilding your house has become a lot more expensive, even if the value of your house is depreciating.
Edit: rising cost of construction x rising frequency of claims / disasters.
House value depreciating? This is Australia we're talking about. My house 'makes' almost as much money every year as I do. It doesn't do me any good however, as any other house I would like to buy has also risen in price.
Just been through this myself last week, and the renewal i got quoted was $2250.
My car insurer with their discount for doing 2 cars and house was even more expensive.
Rang round and got it down by $800 with over 50's insurance and similar with RACV
Building 560,000
Contents 150,000
Excess 1000
Without all the dodgy additions (breakage etc)
Spend a few hours doing the online quotes, it can be worth it.
Insurers apparently are making record profits
As private entities with shareholders they have no obligation to give you cheap insurance.
It is expected that premiums will increase by another 15% next year
Sometimes, making a new quote is less than the renewal…
Agree, my new quotes for home insurance have been less than the renewal for the last 4 years.
You live in a house that requires build of 3M ! Sir this is not the forum for you. Try OzMillionaires
My premiums with zero claims, minimal increases to the insured amounts (whatever % they apply for the incrementals each year), since the first policy in 21' to the policy that needs to be renewed next month have increased 167.49%
Starting at $633 which was shopping around and another discount as I've got 3 vehicles insured with the same company.
This current policy is $1694.
The two biggest jumps were YoY from 23'-24' (44.85%) and 24'-25'(36.52%).
Each year I've spent countless hours looking around without being able to find a better deal, also there is the fact that moving one policy out could impact the insurance cost on vehicles as that bundle will be broken.
We are absolutely getting F'd in Australia on so many things, from bad deals on interest rates with short lock in periods to the absolute pillaging of insurance costs, for home, car & private health care, as well as the cost of gas and electricity (my power increases from 1 Aug is another 39% increase from last year).
Our big 4 banks are in the top 10 of most profitable in the world, our supermarkets are some of the most profitable in the world.
We are just being bled dry due to so little competition and so little willingness for the govt to step in and take any steps that help us, they want to over-regulate the F out of us for every day things but aren't willing to do a single thing about trying to control the excessively high profits extracted from us at every chance.
Yes. But zero action on climate change gives the companies a handy $$$$ free kick. Personally I think the increase should only apply to the morons who kept voting for zero action. The LNP voters. The LNP whose 1st 2025 policy (this term) is to scrap net zero. To throw the very people who support Joyce,Canavan et al , under the bus. Again. This is Barnaby's last gift to his constituents before he snatches it and scores his retirement millions and gold card lifestyle. Ironic that he would choose to sponsor the extremes his farmer mates suffer more of every year, (more extreme droughts/floods/fires) and then sign them up for far worse in perpetuity, as his parting gift.
The Nats are a miner party. They don’t give a rats about the agrarian socialists. Having renewable technology on a farm would be a crop that delivers every year. Free fuel being delivered whilst the earth is liveable hurts their mining mates. Farmers are like MAGA morons, just feed them bullshit and they will keep voting Nats.
Yes