A Path to Stability: Expert Pushes for Insurers to Adopt Total Replacement Coverage

1

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

At the core of the issue, Trowbridge emphasized, is the prevalent dependence on clients to select their own sum insured. This widely adopted practice across the insurance industry often leads to imprecise coverage levels and exposes homeowners to substantial financial risk when calamities strike. The key anxiety for consumers lies in accurately anticipating reconstruction costs, a task that many find challenging and imposing. Trowbridge argues against the industry's attitude of absolving itself from verifying coverage adequacy, illuminating the dire repercussions faced by those enduring disaster with insufficient insurance.

In a written testament to the inquiry, Trowbridge stoutly advocated for broader availability of full replacement insurance options. A transition he posits would not overly burden premiums given the relatively infrequent nature of total loss incidents. "It should only make a negligible impact," he assured the investigative panel.

Trowbridge opened the floor to considering regulatory shifts to compel insurers to adopt such practices. However, he acknowledged the complexity of reaching effective solutions to what he identifies as a prevalent and unreasonable problem.

The discourse shifted momentarily to the insurance sector’s response post-Canterbury earthquakes, noting New Zealand's departure from full replacement policies as reinsurers eyed more predictable outcomes. Trowbridge countered this hesitation with an argument for the Australian insurance and reinsurance market's adaptability, drawing parallels to the unanimity achieved in introducing mandatory flood coverage years past.

Some providers, including AAMI, maintain such full replacement offers, pointing to feasible paths ahead. What may seem an onerous task for insurers and their reinsurance partners is, according to Trowbridge, a matter of confronting the same challenge with renewed resolve.

As the inquiry continues, the Economics Committee of the House of Representatives hears diverse perspectives, ranging from consumer advocates to industry representatives. In the coming months, the committee aims to ground its findings with on-site visits to regions thrashed by floods, understanding the real-world aftermath and insurance landscape.

The ultimate goal is to crystallize observations and recommendations by the end of September, laying down firm tracks for policy shifts and industry practices that may finally mitigate the insidious underinsurance that plagues Australian homeowners.

Published:Tuesday, 2nd Apr 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

Heightened Road Risks During Holiday Season: Insurers Issue Warnings

20 Jan 2026: Paige Estritori

As the Australian summer school holidays coincide with peak freight activity, insurers and transport specialists are raising concerns about heightened road risks. The surge in freight traffic, coupled with increased holiday travel, amplifies the potential for road incidents, particularly involving heavy vehicles. - read more

Insuregroup's Remarkable Growth in Truck Insurance Policies

20 Jan 2026: Paige Estritori

Insuregroup, a specialist insurance brokerage serving Australia's transport and logistics sector, has recently announced a significant milestone: processing over 10,000 insurance policies since its inception, with a 25% increase in policy volume over the past year. This growth underscores the escalating demand for comprehensive truck insurance solutions tailored to the unique needs of Australian freight operators. - read more

NTARC Report Identifies Inattention and Speed as Primary Factors in Major Truck Crashes

20 Jan 2026: Paige Estritori

The National Truck Accident Research Centre (NTARC) has released its latest Major Incident Investigation Report, shedding light on the predominant causes of significant truck crashes across Australia. The findings reveal that human factors, particularly inattention, distraction, and inappropriate speed, continue to be the leading contributors to these incidents. - read more

TAL's Health Sense Plus Now Covers Income Protection Policies

19 Jan 2026: Paige Estritori

In a significant development for policyholders, TAL has expanded its Health Sense Plus program to encompass income protection (IP) policies. This initiative, effective from August 8, 2025, aims to incentivise proactive health management by offering premium discounts to clients who engage in preventative health checks. - read more

New Legislation Prohibits Life Insurers from Using Genetic Test Results

19 Jan 2026: Paige Estritori

The Australian government has enacted legislation prohibiting life insurers from using the results of genetic tests to refuse coverage or increase premiums. This landmark decision aims to eliminate genetic discrimination and encourage individuals to undergo potentially life-saving genetic testing without fear of financial repercussions. - read more

Click for more Insurance News