Archive for May, 2011

INSURANCE giant Suncorp has assured Queenslanders they will continue to offer full flood cover, but warned some households could face unfair premium hikes or be priced out of the market if the government doesn’t work towards better flood mapping and mitigation strategies.

Personal insurance chief executive Mark Milliner said digital mapping, improved infrastructure and smarter planning would provide more equity among the community and negate the need for future disaster relief levies.

“We’ve got the perfect opportunity with these inquiries going on to make changes to what we do going forward, so that when disasters occur again, there’s less damage. It is important because we can manage premiums better,” he said.

“If we keep trying to future-proof areas that are at risk from disasters by working together with governments at all levels, then I think you can keep premiums at an affordable level.

“If we’re not careful and we go to a more broad, natural-disaster-type pool, you get lots of averaging occurring and I don’t think it’s fair on people.

“More importantly, the reality if you’re not careful, you end up with the whole community being slugged with extra taxes to help fund all these natural disaster pools.”

Suncorp is one of the only insurers to provide automatic flood cover.

Mr Milliner acknowledged the industry as a whole also needed to make improvements.

“We don’t smell of roses across the industry … obviously there’s some dissatisfaction out there with disclosure and lack of riverine flood cover, so you can’t say the industry has come up perfectly in that sense,” he said.

Suncorp, which is handling more than 50,000 claims in Queensland worth in excess of $1 billion in the wake of the floods and Cyclone Yasi, said its premiums would increase by an average 10 per cent but those who received considerable flood damage would pay more.

“It does vary depending on where people live,” he said.

“The reality is we should be pricing specifically and people who want to live in high risk areas should pay more for insurance.”

The insurer, which covers 40 per cent of the market, has assessed close to 95 per cent of affected homes, but Mr Milliner said it would take up to 18 months to complete the rebuild.

“The reality is we can’t do everybody at once, I can’t promise everybody we can get everything done tomorrow,” he said.

Mr Milliner said he was confident that reinsurance costs wouldn’t be too steep, despite the spate of natural disasters in Australia, Japan and New Zealand.

“Reinsurers profitability has broadly been strong and therefore whilst we’re in the middle of it here and it feels really bad, globally it’s not quite so bad,” he said.

“The reality is, our premium is going to go up a bit, but I don’t see any issues with us getting reinsurance. It’s important that we do because it protects our balance sheet and we don’t hold as much capital.”

Mr Milliner warned against the over-regulation of the industry.

“We are managing as a group over $3 billion in claims – we’ve got about a $7 billion premium pool but a lot of that gets paid back into the community every year because we pay claims,” he said.

“If governments start to change too much, then it will affect the economy.”

Insurance advisory business Jardine Lloyd Thompson yesterday warned “reinsurance cost increases for Australian risks are now very likely”.

“The number of large (reinsurers) globally is rather finite and none have avoided the recent loss activity,” JLT said in a report.

In a report, JLT also said the wild weather could affect government directives about zoning and building codes.

“Already we have seen evidence that certain damaged property cannot be rebuilt on the same part of the existing site,” JLT said.

“Compounding this is the potential that more stringent building codes could be introduced to ‘harden’ sites against natural perils.”

This demonstrated the need to have adequate cover “in place to address the extra costs of reinstatement following damage”, JLT said.

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About six kilometres from Brisbane’s CBD, Coorparoo continues to benefit from consumer demand for near-city living.

Coorparoo is on Brisbane’s south-eastern side and has easy access to the city along either the Southeast Freeway or the Story Bridge.

The number of units in Coorparoo has risen sharply in recent years, owing to its close proximity to the City.

A very small part of Coorparoo is designated semi-industrial and commercial; however, this is a defined and isolated area not impinging on the residential zones of the suburb.

Coorparoo benefits from a train station only a few stops from the CBD, as well as a frequent Brisbane City Council bus service.

The suburb has a high proportion of medium density unit complexes and a strong rental market.

Around the elevated parts of the suburb, million dollar house sales have occurred in recent years.

There are private and state schools in the suburb.

Coorparoo’s shopping district includes a Coles Supermarket, chemist, bank and restaurants.

There are extensive small businesses, banks and retail outlets that serve the surrounding suburbs as well as Coorparoo.

Westfield Carindale is the closest large shopping centre and the Stones Corner retail fashion outlets are nearby on Logan Road.

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WOMEN are increasingly deciding a man is not a financial plan, with a survey revealing that the number of females buying property by themselves is growing.

According to lender Rams Home Loans, data shows that almost half the sole home loan applications now came from women.

A shift had been seen in the past 18 months. Before then, about 70 per cent of home loan applications had been submitted by men, Rams said.

One woman entering the property market is Kate Beecroft, 24, who late last year purchased an older two-bedroom unit, which she has since renovated, in the south Sydney suburb of Cronulla for $330,000.

“I knew the longer I waited, the more prices would go up,” Ms Beecroft said. “I thought it would be a good opportunity to buy a unit as a starting point and use that to purchase a house further down the track.”

Ms Beecroft, who works for the Department of Families, Housing and Community Services, said she talked about buying a property with her boyfriend of two years, but he had not been ready to commit to a mortgage.

“It was something I wanted to do and that is why I decided to do it by myself,” she said.

Rams chief executive Melos Sulicich said those taking on the loans independently were not necessarily single, though some were newly single women involved in refinance deals.

Also, he said, the buying trend varied across states.

General manager of sales for McGrath Estate Agents Matt Lahood said inner city terraces and apartments with security parking, as well as beachside units, were popular with the female buyer.

“We have definitely seen in the last five years a segment in the marketplace of single career women,” he said.

Linda Fitzhardinge, who has run financial seminars for women called Prince Charming Isn’t Coming, said more women were now purchasing properties in their late 20s or early 30s whereas previously women had purchased after a divorce or when they thought it unlikely they would marry.

“There are a lot more women getting into investment property,” Ms Fitzhardinge said.

“They are now often making good money on their own and delaying that marriage thing, so getting into their own property is part of that cycle, and they feel very comfortable with property over shares.”

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