Young Australians Face Higher Home Insurance Premiums
Homeowners across Australia are grappling with rising insurance costs. However, a recent investigation by the ABC reveals that the burden isn’t shared equally. The study found a significant disparity in home insurance premiums based on age, with younger Australians routinely paying hundreds of dollars more annually than their older counterparts.
Tara Matteson, a homeowner from Grafton, is one of the many Australians struggling with soaring insurance costs. Despite her home never experiencing riverine flooding, her premium with NRMA has surged from $1,640 in 2018 to a staggering $4,280 this year. “It’s a big struggle,” she said.
The ABC’s Investigation
The ABC conducted a series of tests to determine if insurers were treating homeowners differently based on age. The investigation gathered over 200 home insurance quotes from five major insurers across four cities (Padstow in Sydney, Eatons Hill in Brisbane, Deer Park in Melbourne, and Midvale in Perth). The researchers varied the age of the homeowner, ranging from 25 to 75 years old while keeping all other factors consistent.
Key Findings
The results were striking. The ABC found that:
- Younger Australians pay more: 25 to 30-year-olds were quoted higher premiums than any other age group by Budget Direct, NRMA, and QBE, paying between $150 and $490 more annually than a 75-year-old.
- Millennials face high costs: Millennials (aged 30 to 40) often received the highest quotes from Suncorp and Allianz, with premiums between $350 and $500 more expensive compared to 75-year-olds.
- Inconsistencies across insurers: Some insurers charged more to certain age groups based on the location.
Is Age Discrimination Legal?
Insurance companies are permitted to consider age when calculating premiums but must justify it with data. John Berrill, an insurance lawyer, explained, “The anti-discrimination laws are serious stuff and insurance companies are bound by them.” He emphasized that insurers have a legal obligation not to discriminate based on age unless backed by solid actuarial data. Consumers who suspect age-related discrimination have recourse to the Australian Financial Complaints Authority (AFCA) or the Australian Human Rights Commission.
Industry Response
The Insurance Council of Australia (ICA)’s CEO, Andrew Hall, stated that pricing differences are based on insurers’ assessment of risk for each customer. According to Hall, insurers assess a variety of factors, including income level, in order to assess the risk to the company. Other insurers, however, were more specific. QBE stated that older customers may be charged less due to the fact that they spend more time at home and are therefore more able to notice potential hazards.
Many insurers are trying to justify the costs of their premiums.
What’s Next?
Consumer advocate Peter Gartlan, Co-CEO of Financial Counselling Australia, is calling on the insurance industry to provide the data behind their pricing models or to remove age-based pricing. He also urged the government to empower the ACCC to investigate and monitor disproportionate increases in insurance premiums. The Financial Services Minister, Stephen Jones, acknowledged the complexity of the issue, stating that the government’s insurance affordability task force is working on a comprehensive strategy to address rising costs.
