Recent rate increases explained

As a loyal customer you may have questions about the recent increase in your premium. While many factors affect your premium, the quality of your cover always plays a big part. High quality and low price rarely go hand in hand, so whilst we provide you with superior insurance cover, we also recognise this does not always come at the lowest price.

Our focus is, and always will be, to provide you with insurance that offers long term security and doesn't leave you short when it matters most. We assess your business as a whole and develop your cover accordingly, which is where quality options such as full replacement cost can really benefit you.

Whilst you may be provided with a short term saving, a reduced premium can mean reduced cover leaving you out of pocket at claim time.

1. CATASTROPHES

The past year was one of the worst in history for the insurance industry in terms of claims emanating from catastrophes. Not only has there been a significant rise in the number of claims occurring but the severity of the claims has also increased.

These incidents received wide media coverage and affected the lives of many Australians. While we are proud of the way we responded to these events, the financial impact was significant.

As a result of the catastrophes in both Victoria and Queensland we paid out approximately 1,000 claims totalling in excess of $26 Million to our clients.

The table below highlights the losses experienced by the industry as a whole over the past year *

2. REINSURANCE COST INCREASE

As an insurance company we too need to take out insurance covers to ensure that we are able to pay claims especially catastrophic events (such as those that happened in 2010/2011) – this is called ‘reinsurance’ and is standard practice for all insurance companies.

Catastrophe Reinsurance costs increased across the industry by 30% to 80% this year2 as a direct result of the natural catastrophes and losses experienced in Dec ’10 and Jan ’11.

In the past we have not passed on these higher reinsurance costs to cyclone exposed customers, however the reinsurance cost increases experienced this year mean it is untenable for us to continue this practice.

We are still doing what we can to reduce the impact of reinsurance costs so the premium increases we are implementing will only partially cover the reinsurance costs we incur on cyclone prone risks and remain at the low end of industry practice.

3. YOUR CLAIMS HISTORY

As always we have taken into account your claims history when reissuing your premium. As with all insurance companies if you have (or haven’t) made any claims since your last premium this has to be taken in to account when assessing the risk involved in insuring you.

WHAT ARE WE DOING TO HELP WITH THIS PRESSURE?

You may have heard that we’ve recently made some changes at the company and be wondering how this benefits you.Whilst the changes might take some getting used to they will ultimately ensure a smoother customer experience for you whilst allowing our sales staff to concentrate on ensuring you have the best cover.

These changes made have been outlined in more detail in the table below:

When you call our customer service number you will be directed to the team who can most efficiently deal with your enquiry as is illustrated below:

*source: Insurance Council of Australia December 2011 www.insurancecouncil.com.au