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It is important to note the potential degree of under-insurance that occurs across the Study Area. There
is no readily available data that can be used to quantify the extent of under-insurance, therefore other
methods of calculating this have been employed.
The Insurance Council of Australia (ICA) commissioned Tooth and Barker (2007) to examine the profile
and trends of non-insurance across Australia. Data used in the analysis was sourced from Roy Morgan
Research, ABS Home Expenditure Surveys, and an NRMA survey. The key findings were:
x
About 23 percent of residential households do not have a building or content insurance policy.
x
Between 4 and 9 percent of home owners do not have building or contents insurance.
x
Non-insurance tends to be associated with people who are:
o
at earlier stages of life
o
living in cities and in particular regions within cities
o
born in non-western countries in particular ‘value’ segments
o
with lower levels of education.
o
without full-time work.
x
non-insurance appears to be higher for many demographic segments, such as retirees with
mortgages and single parents (those who are most exposed in case of loss).
Home tenure and dwelling type are important factors regarding the demand for building and contents
insurance. Building insurance is relevant only to those households who own (or have a mortgage) their
dwelling and are in dwellings that are not a part of a body corporate (units, semi-detached buildings or
town-houses). A large portion of households in flats and semi flats pay body corporate fees and thus
indirectly have building insurance cover (Tooth and Barker, 2007).
Table 13.1
shows the proportion of dwellings in Australia where owner-occupiers have not taken out
building or home contents insurance. The rate of no insurance for owner-occupier is most significant
amongst those residing in flats, however this is covered indirectly through the body corporate. Home
owners without a mortgage (6%) are more than twice as likely to not have building insurance compared to
those with a mortgage (2.2%).
Table 13.1: Percent of Non-insurance by dwelling type (owner-occupied dwellings)
Insurance
House
Semi detached
Flat
Building Insurance
3.9
5
17.9
Contents insurance
10
16
32
Source: ABS HES, in Tooth and Barker 2007
Figure 13.1
shows at a national scale a comparison of the rates of no contents insurance by country of
birth. The rates are higher in respondents who were born in Asia or other non-western countries, yet as
incomes increase the difference in rates reduces. This trend is not dissimilar for home building
insurance.
