In a vicious attack on the ethics of the insurance industry, the Australian Workers’ Union has criticised the removal of the fire levy as it suggests insurers will just pocket the additional revenues.
Paul Howes, national secretary of The Australian Workers’ Union, writing in The Sunday Telegraph, stated: “We are about to see a colossal cost shift from insurance companies to households. Insurers stand to gain a whopping $700 million a year.
“The O’Farrell government’s argument is that the present system means those who are insured subsidise those who are uninsured, therefore a property levy is fairer. However, to hold true this argument depends on a single mighty assumption: that the insurance companies plan to pass their $700 million windfall on to policy-holders. Anyone keen to take that bet?”
Howes also charts the origins of fire brigade in the 19th century, pointing out that insurers were behind the brigade’s formation so it could reduce losses. “What all this shows is that the insurers clearly have a vested interest in a properly run fire service,” wrote Howes.
“Yet now, with a sympathetic government installed in Macquarie St, they are trying to wriggle off the hook for funding the very service they established and continue to benefit handsomely from.”
How the insurance industry’s key role in the formation of the Metropolitan Fire Brigade 128 years ago answers the core issue of uninsured homes today getting fire coverage without contributing, Insurance Business is not quite sure.
Howes goes on to discuss how insurance companies have a legal obligation to their shareholders, not their customers and all the O’Farrell government has succeeded in doing is making “some lifelong mates in one area: the insurance industry.”
“It’s worth finding out who does the lobbying for the insurance industry, because they have been spectacularly successful under this state government,” added Howes.
In terms of the accusation that insurers will not follow through on premium cut, before the levy was even officially scrapped in Victoria, QBE had notified its brokers that premiums were going to plummet after the levy’s removal.
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Regional Broker on 03 Oct 2012 11:05 AM
A union boss attacking an industry on the ethical use of money. I would imagine the irony of that would be lost on Paul Howes.
Luke Chrzanowski on 03 Oct 2012 11:10 AM
It’s amazing that anyone with a pen/computer & a job title can get a column published. No matter how uneducated their views may be…
Cranky Again on 03 Oct 2012 11:31 AM
Uninformed, ignorant, misleading and downright stupid. Paul Howes’ should put his brain into gear before setting his mouth in motion. As everyone (i.e. EVERYONE) who is involved in the general insurance industry knows, fire levies in NSW and Victoria are separately identified from the premium component on all invoices. Based on the experience in other states that have transferred fire levies to property rates (such as Queensland) his wild assumptions are without foundation. If his comments sound like the ravings of gormless dolt, they probably are.
Robert Cooper on 03 Oct 2012 01:01 PM
What you expect from one of the faceless men who dumped a popular PM because he was not a Union Man. Has Paul Howes not heard of competition, no because he does not believe in competition. It is the competitive rivalry of insurers that will see the premiums come down. He makes it sound like insurers are going to add the equivalent amount to the base premium. It would not be smart for any insurer to do that and lose market share as a result.
At least we are encouraging more people to insure by lowering the price.
The Elephant In The Room on 03 Oct 2012 02:11 PM
@Cranky Again: never let the facts get in the way of a good story. The fire levy in NSW is not a levy on policy holders, but rather on insurers. There is no legislative or regulatory requirement that policy prices are jacked up to cover the levy, nor any requirement that if the levy is abolished, premiums will drop. I am yet to see a single public commitment, let alone anything binding from anyone, that if the levy on the insurance industry is removed, premiums will drop. Indeed, surely the profit-maximising obligations of any listed company will ensure that companies will have to try to pocket as much as possible of their savings on the levy, while maintaining premiums as high as the market will bear?
[Insurance Business Editor Comment]
“I am yet to see a single public commitment, let alone anything binding from anyone, that if the levy on the insurance industry is removed, premiums will drop.”
There is a commitment from QBE to its brokers in the story you have commented on that premiums will drop. But never let the facts get in the way of a good story, hey?
Dean McCauley on 03 Oct 2012 02:15 PM
Here’s a link to the actual story if anyone is interested?
100% agree with all 4 comments so far. It never ceases to amaze me how politicians (you could say that Paul is a quasi politician) never seem to let the facts get in the way of their agenda.