Life Begins At.....
Issue link: http://ebook.aprs.com.au/i/32324
INSURANCE CHOOSING THE RIGHT INSURANCE POLICY Purchasing the right insurance product to cover your assets like your home, car, and furnishings will ensure that if you ever experience damage or loss to these key assets that you will be able to replace these quickly and get on with life, writes Paul Giles. Insurance is an important component in risk management for individuals and businesses. Using insurance to cover yourself and your family contributes to removing the need to rely on others for assistance in the unfortunate event of an accident or crisis that affects you. With the types of insurance available from the general insurance market you can purchase insurance to cover you for when you travel in Australia and overseas, your car, your home and its contents, your jewellery and even your pets. The general insurance industry, which is represented by its peak industry body the Insurance Council of Australia, is extremely competitive in Australia. As a result there are a large number of different types of insurance products available for people to chose from that meet their personal insurance needs. These are provided by a variety of the companies that compete in the Australian insurance market. Insurance is also competitively priced so it pays to shop around from insurer to insurer. 126 THE RETIREE WINTER Once you have insurance it is important for people to keep their policies up to date to ensure that you are covered for the right amount of money. Checking the value of your assets on a regular basis such as every 12 months is highly recommended. Unfortunately, not everybody does this and it is only at times when disaster strikes that people realised they do not have the correct level of insurance and that they are under-insured. Trying to help people get on with life has been a key issue for Australia’s insurers after the recent spate of natural disasters – floods, a cyclone and bushfires. The floods in particular have highlighted that the Australian community needs to be better able to respond to catastrophes and recover from them. The Insurance Council has been at the front of such reform with its 10 Point Plan (see box). The Plan contains policy and industry initiatives aimed at developing a more effective and sustainable response to disasters in Australia. It also seeks progress on a workable definition of “flood”. A definition proposed by the Council to the ACCC in 2008 was not accepted by the ACCC, but no alternative was proposed. The ICA invited Assistant Treasurer Bill Shorten to attend ICA Board meetings and discuss how to develop more effective and sustainable responses to disasters in Australia, specifically floods. The Plan provided the focus for this dialogue. The Insurance Council is pleased that Mr Shorten is also committed to an outcome. The ICA is keen to develop a realistic long-term solution. The ICA is concerned that the proposed Flood Levy may have unintended consequences, including creating a moral hazard and encouraging fewer people to take responsibility for their own risks through purchasing appropriate insurance products. Also, the industry does not support the concepts of mandatory flood insurance or a national insurance pool for natural disasters. This is because both serve to distort the private sector insurance market and will result in people who have zero or extremely low levels of risk paying higher premiums to support those living in high-risk areas. Why should people who live along the Great Dividing Range or in the hills around capital cities and other places contribute to a flood levy? It is the view of the ICA that whilst disaster support for the re-building of infrastructure is needed, it should only be conducted hand-in-hand with reforms to encourage greater take-up of private insurance.