Insurance companies are charging up to $1700 more than each other for home and contents policies covering identical houses in the same suburb, prompting calls for greater transparency.
But the industry argues the variations are due to different types of coverage and are evidence of healthy competition.
Research by the Emergency Services Levy Insurance Monitor, which surveyed premiums across 11 suburbs, found an average variation of $1100 between insurers for “basic home and contents polices”.
In Medlow Bath, the highest quote of $2794 was from GIO, two-and-a-half times larger than the lowest quote of $1106 from Coles.
In East Gosford and Bradbury, near Campbelltown, the maximum quotes were 2.4 times more than the lowest, a difference of $1461 and $1700 respectively.
The monitor, Professor Allan Fels, said suburbs have different characteristics “and you would expect to see price differences across locations”.
“But it’s very concerning there are such big differences in prices quoted for the same property,” he said. “It suggests that competition is not fully effective in this industry.”
Professor Fels says insurers “are ignoring” calls to list the previous year’s policy cost in their renewal insurance notices – a measure being introduced for UK general insurers from April.
Insurers had also resisted establishing home insurance price comparison websites.
Insurance Council of Australia chief executive Rob Whelan branded the monitor’s comparisons “misleading” and said that “each insurer’s policy is different”.
“They offer varying inclusions and exclusions, with different limits,” he said.
“Further, several insurers quoted offer total replacement, which usually has a higher premium, while most insure for agreed value.”
Mr Whelan said insurers are “exploring the feasibility” of listing last year’s premium on renewal contracts and the council had organised a trial.
He said comparison websites “do not best serve the interests of consumers” but the council will conduct an “industry review of product comparability options” to improve customer understanding of differences.
However Susan Quinn, senior policy officer with the Consumer Action Law Centre, said a comparison website “would be a good first step and an improvement on transparency for consumers as it is”.
“What’s really needed from the industry is to accept the onus for consumers being able to compare policies,” she said.
Professor Fels has been appointed to oversee the change in funding the NSW fire and emergency services budget from a levy on insurance contracts to an annual tax on property from July 1.
The monitor is charged with ensuring insurers drop residential insurance premiums by up to 20 per cent and can apply penalties of up to $10 million to companies breaking the rules.
This story Administrator ready to work first appeared on Nanjing Night Net.