Insurance The Silent Killer

Each and every year you, like me, expect costs to go up. Insurance, telecommunications, electricity, council rates and gas. Of course, we also expect our pay to increase each year to cover these costs.

The cost of everything going up is called “inflation”. The Australian government likes to keep inflation at an average of 3%. Meaning if you paid $100 for something last year, this year you would pay $103 due to inflation. Next year this same thing would cost $106.09.

Companies are a different matter. There are some companies or even whole industries that raise their prices higher than 3% year after year. Therefore, eating into more of your wage as the calendar gets replaced.

After looking back at my records since 2007, the biggest offender is my home insurance costs. In fact, would you believe in just 4 short years our total bill has gone up $165 or 42%!

However, the scary part of this is, every year we have done our best to keep the cost down. We pay the insurance yearly because there is a discount instead of paying monthly. We compare prices yearly and ring and ask for a discount (and usually get it) before we go another year. We also have another car on this insurance policy to get our overall discount down. Plus we have never claimed ANYTHING! We have done all the right things to offset any rise in insurance costs. But still it happens!

Australian inflation rates as tracked by the government since 2007 have averaged smack on 3% per year. My insurance has averaged a price hike of 12.5% per year. Can you see something wrong here? God only knows what the average hikes would have been if we didn’t do all our price reduction ideas. Or had to use the insurance to cover an accident.

Last time we renewed our insurance we put our foot down. Right away after ringing the call centre we asked to talk to a team leader. We pointed out the differences in the real Australian inflation vs their company’s price hikes. They had nowhere to hide. They quickly offered us a $110 discount to stay with their company. This is still above inflation, however, its way better than the standard increase.

Why should this concern you? Well, if you receive a pay rise each year that is in line with inflation, but the companies you use increase their prices above inflation each year then this is problem. Without even knowing about it, you are slowly getting poorer. Your pay will just not stretch as far.

So what can you do about it right now? Ring your insurance company and ask for the costs for the last five years. Work out what your average percentage rise has been. Now when your insurance renewal form arrives give them a call. Use cold hard facts to prove your case. Ask for a discount or explain you’re walking.

Of course insurance companies are just the beginning. Why not track a range of services to see which companies are treating their customers like their own personal piggybank. Show your providers you are standing up for yourself.