Greater transparency for home and contents insurance
Insurers in NSW to be required to display previous year's premiums from 1 July 2019.
In a bid to break the "loyalty tax" cycle, NSW Emergency Services Levy Insurance Monitor Professor Allan Fels will today outline the introduction of new regulation that requires insurers to include both the new and previous year's home insurance premium on all renewal notices in New South Wales.
The new regulation follows an investigation by Fels which uncovered that existing customers were paying on average 27% more for their policy than a new customer, hence the "loyalty tax" moniker.
It's hoped that by presenting the premiums side-by-side and in plain sight, more consumers will be prompted to shop around and save on home insurance if they notice their premiums are rising. At the very least, the move should encourage people with insurance in New South Wales to be more active consumers. It should also help to weed out bad operators, Fels says.
"People should be able to see any price increases easily, particularly given the practice by some insurers of charging higher premiums for renewing customers than for new ones," he said in a statement.
And it's not just home insurance policies that will see changes, with both home and motor insurance renewals now required to break down the components of the premium. This is being done to stop insurers from charging excessive premiums off the back of changes to the Emergency Service Levy (ESL).
What is the ESL?
The Emergency Service Levy (ESL) collects funds from "local councils, insurance companies and foreign insured policy holders, to support the work of emergency services in NSW". From 1 July 2019, the amount that is to be collected will be going up to account for changes to workers' compensation laws that will make it easier for firefighters to claim for 12 specific work-related cancers. According to insurancenews.com.au, this will mean that from 1 July 2019 taxes will make up more than 50% of home and contents insurance premiums in New South Wales.