* $225m in home warranty premiums were collected, but only $16m paid out in claims
* The premium-to-claim pay out ratio is well below normal
* More insurance news in our Money section
INSURANCE companies are ripping off New South Wales, with figures showing they collected $225 million in home warranty scheme premiums, but have only paid out $16 million in claims, the state opposition says.
A Senate inquiry sitting in Sydney on Friday heard that six insurers have collected the premiums to cover poor or incomplete work on homes since the scheme was made compulsory by former NSW premier Bob Carr in 2002.
The $16 million paid out is well below the usual premium-to-claim ratio of between 65 to 80 per cent for consumer protection insurance, Fairfax reports.
Opposition fair trading spokeswoman Catherine Cusack said it showed the NSW government had mismanaged the home warranty insurance scheme since in began.
"What a rip-off,'' Ms Cusack said.
"Even though insurance companies have taken rapacious profits from the consumers, the scheme has been notoriously difficult to claim from.
"Many have gone bankrupt trying to claim for money to repair their homes.''
Ms Cusack said she had repeatedly called on Fair Trading Minister Linda Burney to seek expert advice on the issue.
Comment was being sought from Ms Burney's office.
http://www.dailytelegraph.com.au/money/home-warranty-scheme-a-rip-off/story-e6frezc0-1111116656735
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Payout ratio is around 0.7% (well below the 60%-85%)
If the insurance companies refuse to give value perhaps it's time for the Government to simply take over the scheme and the insurance companies get to lose a market.... Good for insurance stocks though...
* The premium-to-claim pay out ratio is well below normal
* More insurance news in our Money section
INSURANCE companies are ripping off New South Wales, with figures showing they collected $225 million in home warranty scheme premiums, but have only paid out $16 million in claims, the state opposition says.
A Senate inquiry sitting in Sydney on Friday heard that six insurers have collected the premiums to cover poor or incomplete work on homes since the scheme was made compulsory by former NSW premier Bob Carr in 2002.
The $16 million paid out is well below the usual premium-to-claim ratio of between 65 to 80 per cent for consumer protection insurance, Fairfax reports.
Opposition fair trading spokeswoman Catherine Cusack said it showed the NSW government had mismanaged the home warranty insurance scheme since in began.
"What a rip-off,'' Ms Cusack said.
"Even though insurance companies have taken rapacious profits from the consumers, the scheme has been notoriously difficult to claim from.
"Many have gone bankrupt trying to claim for money to repair their homes.''
Ms Cusack said she had repeatedly called on Fair Trading Minister Linda Burney to seek expert advice on the issue.
Comment was being sought from Ms Burney's office.
http://www.dailytelegraph.com.au/money/home-warranty-scheme-a-rip-off/story-e6frezc0-1111116656735
---
Payout ratio is around 0.7% (well below the 60%-85%)
If the insurance companies refuse to give value perhaps it's time for the Government to simply take over the scheme and the insurance companies get to lose a market.... Good for insurance stocks though...
