Insurer slammed over pensioner’s premiums
Insurer slammed over pensioner’s premiums | Insurance Business Australia
Insurance News
Insurer slammed over pensioner’s premiums
It responds to allegations of punishing customer for loyalty
Insurance News
By
Roxanne Libatique
An Indigenous pensioner named Leonard O’Meara – living in the town of Derby, situated in the Kimberley region of Western Australia – has found himself grappling with escalating home insurance premiums.
According to ABC’s report, O’Meara secured an ANZ home insurance policy back in 2009, initially underwritten by QBE Insurance (QBE) and later transitioning to exclusive coverage by QBE.
O’Meara family takes action
During 2022-2023, O’Meara was confronted with an overwhelming bill, surpassing $9,500 – an amount exceeding twice the regional average of $4,395, as reported by the Australian Competition and Consumer Commission (ACCC).
This substantial sum raised alarms within O’Meara’s family, compelling his daughters to intervene. Despite the modest value of the property and the absence of recent cyclones or flood risks in Derby, the premiums continued to surge, the report stated. From 2009 to 2024, O’Meara contributed a total of $54,000 toward home insurance, with costs nearly quadrupling after 2016, even though the policy excluded contents.
A recent property valuation disclosed that the property, erected in the 1950s, was appraised at no more than $175,000, with the majority of the value attributed to the land. The incongruity between the property’s market value and the insurance coverage prompted the family to scrutinise the policy’s suitability.
“How do they charge an aged pensioner this amount of premiums, for a home that we don’t even know the value of?” Selena O’Meara said, as reported by ABC.
Expert insights
In the midst of the dispute, financial counsellor Alan Gray, from Bush Money Mob, entered the fray, characterising O’Meara’s situation as potentially the “worst insurance rip-off” he had encountered. He procured an alternative quote from another insurer, presenting comparable building coverage at a significantly lower premium of $2,850.
Gray voiced concerns about a potential “loyalty tax,” suggesting that O’Meara, lacking the ability to easily explore alternatives, may have been taken advantage of due to his loyalty to QBE.
“The reality is that a three-bedroom asbestos cottage is not worth anything,” he told ABC.
Insurance giant responds
In response to the allegations, QBE defended the premiums charged. The insurer highlighted the comprehensive nature of the policy, encompassing demolition, asbestos removal, rebuilding with cyclone-rated materials, and associated costs for remote locations. QBE also cited liability coverage for incidents on the property.
QBE maintained that the premiums accurately reflected the risks and benefits of the policy.
“Mr O’Meara remained a customer for 14 years and the total of the annual premiums paid reflect the covered risks and the benefits which were to be provided in the case of an insurable event for all of those years,” the insurer said in a recent statement. “Mr O’Meara was provided with annual renewal notices, with the opportunity to review his policy and premiums. There was no obligation to proceed with the renewal of the cover, and there was a 21-day cooling off period if he changed his mind.”
Additionally, the insurer acknowledged O’Meara’s concerns in June 2023 and offered free counselling as part of the complaints review process, it stated.
QBE is actively engaged in remediation work following ASIC’s Pricing Promise Review, endeavouring to address customer concerns and ensure a fair resolution, it stated.
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