Calls for subsidies as low-income Australians see insurance as a luxury they can no longer afford

Malcolm Battersby can keep his shopping bill down by growing his own vegetables.

“I still have tomatoes from the last harvest in the freezer, so it’s really, really good,” he said.

“Without that, it’s just more expense.”

But the Tasmanian pensioner feels helpless when it comes to reducing the cost of his insurance bill.

He switched insurance providers for his home and contents insurance policy three years ago, but the cost has increased by $300 every year since.

“If this continues, I expect that within five years I will be paying over $3,000 a year just for insurance,” he said.

Mr. Battersby knows the risk of not having insurance. His house was one of the few on his street left standing after bushfires ravaged the Tasman Peninsula in 2013.

“Some people had no insurance and they were in a lot of disputes. The man across the road, he slept in a tent for good years.

“I know the risks of not having insurance and I will try hard to keep paying the premiums.”

But when it comes to insuring his 20-year-old car, Mr Battersby can only afford third-party cover.

He said without the car he is “stuck”, describing nearby public transport as unreliable.

He backs calls for insurance to be considered an essential service.

“With the electricity bill they give us a discount, with the rego we get a discount, so that’s just another essential. I just think the government could be a bit more generous,” he said. -he declares.

No insurance means “rooted poverty”

The cost of insurance increased by 3.4% between the June 2021 quarter and June 2022, according to the Australian Bureau of Statistics.

Julia Davis of the Financial Legal Rights Center said “part of it is the number of claims insurers are paying and the rising cost of those claims.”

Price increases were even higher in some states.

“In Tasmania alone, insurance has grown by 5.8% over the last year and that really puts it out of reach for many Tasmanians living on low and middle incomes,” said Adrienne Picone of the Tasmanian Council. of Social Service (TasCOSS).

“A recent report…showed that even people living on incomes between $50,000 and $99,000, of whom – half said they were unlikely to get insurance because they couldn’t afford it,” she said.

A 2021 report from the South Australian Council for Social Services (SACOSS) found that up to one in three low-income people lacked contents insurance.

The report warns of the increased risk of natural disasters due to climate change in Australia:

“There will be a greater risk of bushfires, droughts, floods and coastal hazards from sea level rise, coastal erosion and coastal storms.

“The consequences of uninsured people will increase dramatically as the frequency of natural disasters continues to increase with climate change.”

Flood fallout expected to push premiums higher

One million households in Australia are already facing “extreme” levels of insurance stress and will bear the brunt of future premium hikes driven by climate change, the research warned.

The Insurance Council of Australia said premiums are likely to rise further following the floods in Tasmania and the east coast of Australia.

CEO Andrew Hall said collectively it was the biggest flood in Australian history.

He said poor long-term planning in flood-prone areas and rising reconstruction costs were forcing premiums to rise.

“I expect premiums to remain in an upward cycle, largely because the cost of construction and repairs, labor costs, have all gone up across the board,” he said. he declared.

The cost of auto insurance is also becoming increasingly unaffordable for many.

The South Australian Council of Social Service (SACOSS) report found that one in four low-income car owners did not have comprehensive car insurance.

“Our fact sheet on having a car accident and being uninsured is one of the most popular fact sheets on our entire website,” said Julia Davis.

She said that without insurance, in the event of an accident or car theft, “they just don’t have options, they just can’t absorb that kind of loss and without insurance, we can’t do much to help them.”

“People on low incomes will be the least resilient and the least able to bounce back from a bad event, from theft or an accident or an electrical fire or something that destroys their home or their rental property or their possessions,” he said. she declared. said.

“They won’t have a reserve of savings to rely on, they won’t be able to easily and quickly access credit to replace their assets.

“It may just entrench poverty for people who are already struggling.”

Calls for insurance to be an “essential service”

In Australia, the only way to protect assets is to purchase insurance in the private market.

“There will always be vulnerable, low-income members of our society who cannot afford market rates for all services,” said Julia Davis.

“Insurance plays a very important social role in this country in keeping communities resilient and united.