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hurc ast
Page Tools Email to a friend Printer format Community groups are outraged that insurance companies have announced record profits of almost $2 billion while premiums are still going up and governments have made it much harder to make a claim.
Australia's major insurers QBE, IAG, Suncorp Metway and Promina crowed about their staggering boosts in profits as they announced them to happy shareholders in the past few weeks.
Investors jumped on the insurance joy-ride, pumping share prices up 53 per cent in the past financial year.
New insurer Promina had an 88 per cent profit rise in the first half of 2004 while Suncorp announced a record $618 million annual profit - up 60 per cent on 2003. IAG had a record annual profit of $665 million and QBE had a record profit of $320 million in the first half of 2004.
It was bitter news for hundreds of community groups, cake stall holders, festival organisers, adventure holiday businesses, hobby enthusiasts, pony clubs and sports groups forced to close because they could not afford insurance premiums.
Advertisement Advertisement "They have used the terrorist scare to push up premiums," said Chris Belle, who ran the small Cooks River Valley Association, which had tended the abused river since 1923.
The association closed two years ago after it was hit with a $1700 insurance bill.
"I'm sure the shareholders are happy but they aren't the ones who put up cake stalls at fairs and fetes for the community," said Elaine Cohen, who helped organise the annual Arncliffe Festival until it closed when faced with huge insurance bills.
Public liability insurance premiums shot up three years ago after the collapse of discount insurer HIH and the terrorist attacks of September 11, 2001.
Many groups could not get insurance at all and some premiums went up
700 per cent, leaving small community groups with insurance bills as high as $20,000.To stem the premium crisis, governments changed laws to make it much harder to claim compensation and damages for injury.
Insurance payouts were capped for personal injury. The insurance industry would no longer have to pay out millions for outrageous claims to people who were injured through their own foolishness.
Insurers had it coming and going. They took in more and they paid out less. Three years on, the insurance industry is still putting up premiums.
The Australian Competition and Consumer Commission said public liability premiums in 2004 were expected to rise an average of 4 per cent.
This is on top of rises of 44 per cent in 2002 and 17 per cent in
2003."It's a rip off," NSW Council of Social Service director Gary Moore said.
"They are making back all the profits they missed out on in the 1990s when HIH was offering cheap rates. Despite all the legislative changes there are no guarantees premiums won't continue to go up and up. Not-for-profit groups were hit particularly hard and it has caused damage to communities that lost social groups who folded."
Premiums for community groups will rise a maximum of 8 per cent this year.
Macarthur Disability Services, which helps care for 200 disabled people in Sydney's south-west, found its insurance suddenly went up from $3000 to $24,000 this year.
But it's not only in premiums that insurance companies have reaped a bonanza. They have imposed strict risk-management requirements that make it very difficult for operators to conduct any activity in which people might get injured.
Insurance Council of Australia spokesman Rod Frail said public liability premiums were only a small proportion of the profits made by insurance companies.
"Insurers are making the first reasonable profits in 10 years. HIH proved you have to be profitable and strong to stay around and pay claims."