The latest inflation data has revealed skyrocketing insurance premiums could drive the RBA toward a cash rate hike in August, according to an insurance expert.
“This relentless increase in insurance premiums, well beyond increases in other cost categories, is an inflation villain that could see us all suffer from higher interest rates this year,” said Marty Sadlier (pictured above), director at MCG Quantity Surveyors.
The ABS’s latest Monthly Consumer Price Index Indicator shows CPI rose 4% in the 12 months to May.
A deep dive into the data shows insurance premiums rose a staggering 14% during that time – the highest percentage gain across every expenditure class in the analysis.
“Premiums are, quite frankly, out of control,” Sadlier said. “People need to realize the fallout from rising premiums isn’t isolated to policyholders. The impact flows through to us all in myriad ways.”
Sadlier explained the broader consequences of rising insurance premiums.
“High insurance costs are seeing businesses across the country having to reduce spending and staffing levels and, in some cases, close their doors altogether,” he said.
This includes community facilities and small businesses such as restaurants, cafes, and gyms.
“Higher premiums also mean less disposable income for households, which only adds to the pain for local businesses,” Sadlier said.
Sadlier called for immediate regulation of the insurance industry.
“It’s crucial government step in and stop insurers from quoting outrageous premiums that are decimating businesses, driving inflation and leaving Australians at risk of going broke,” he said.
He also stressed the importance of accurate property insurance and the role of insurance brokers.
“Insurance brokers can shop around to secure you the most competitive premium in the market and ensure there are no loopholes for non-payment by insurers in the event a claim is lodged,” Sadlier said.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
