It is twice as expensive to insure in parts of Australia’s north, compared to the south. Insurers have never shied away from this fact, or the factors that cause it. Discussions usually focus only on the risks. The north is more exposed to disasters (flood & cyclone) than other parts of the country.
However, much less talked about, are the factors in the north that make claims (eg, repairing a house) more costly when they occur. The north does not have the same infrastructure and services compared to the south. People in the north pay more for fuel, electricity, trades & services. Ask them. These differences can make it more expensive to build and repair in the region.
How much? This image shows building cost differences (for the same home) around Australia. Building in the north can be up to 42% more expensive. The increased cost of repairs (claims) becomes an additional core underwriting consideration for most insurers who can afford to operate in the north, forcing premiums higher.
Whilst risk mitigation will help to reduce premiums in the north, the solutions must also reduce the cost of operating in the north, by improving infrastructure and services. Contact ICA for more information.