Price insights

Through the monitoring function, the Insurance Monitor obtains data which provides insights to into the pricing of insurance premiums. 

Analysis of the data collected by the Monitor has highlighted a number of factors that could impact the price offered for insurance cover (see below). 

Consumers who are aware of these factors and shop around when taking out insurance cover are most likely to get the best deal. 

Additional research and information will be added over time.


Pricing insights - more information

Loyalty tax: Audio - It may not pay to stay

Loyalty tax: Research note

Attached is a short research note about the pricing differences that are offered for new customers compared with renewing customers. Also attached is a longer Discussion paper titled: Pricing differences: New vs existing customers. This paper was issued by the Monitor in November 2018 to assist in promoting informed discussion around the topic, and feedback is invited from interested parties, including the general public.

Research Note: loyalty tax [PDF size: 174KB]

Discussion Paper: Pricing differences: New vs existing customers [PDF size: 563KB]

Instalment payments

Some insurers offer the convenience of payment by instalments to assist policyholders with managing their payments.

This may be important for some consumers who are unable to meet a large upfront lump sum payment, but can fund the insurance through a series of smaller payments.  It should not be assumed that the convenience is free.

Previous research presented by the Victorian Fire Services Levy Monitor's 2012/13 showed that in the case of one large underwriter’s online quote, if the offered monthly instalment payments were translated to a loan (for the up-front annual premium being paid off over a 12 month period), the effective annual interest rate on that loan would be more than 33 per cent.

No information of that nature is disclosed to the policyholder. 

Under the component pricing rules of the Australian Consumer Law, a single price for services supplied under a contract that allows periodic payments does not have to be displayed as prominently as the component prices. That is, where a periodic payment is applicable, the ‘single price’ still needs to be displayed, albeit not necessarily as prominently as the periodic payment. However, in not indicating the total price that would be paid if paying by instalments, it appears as though insurers are relying on an exception within the Australian Consumer Law that applies when there is an option of periodic payments instead of payment up-front.

Large price variations

In all the monthly standard property profile surveys conducted by the Monitor to date, there are material differences in premium quotations from different insurers, even though the basis of the quote is an identical property profile.  These price differences have persisted over time.

Policyholders are reminded of the need to shop around to get the best value policy for their needs.

We also note that quotes from brands associated with the same insurance company can vary significantly.  For example, in Randwick:

  • AAMI’s quote is $1,691, GIO’s is $1,885 and Suncorp’s is $1,949.  All three brands are associated with or backed by AAI Limited
  • CGU’s quote is $1,538, Coles’ is $1,167 and NRMA’s is $2,220.  All three brands are associated with or backed by the Insurance Australia Group.