Major insurer says ‘carbon tax will lift premiums’

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One of Australia’s biggest insurers has reportedly issued a warning that the carbon tax will force commercial insurance premiums up. Is it time to review your insurance provisions?

A Zurich Australian Insurance note, which is being publicised by opposition industry spokeswoman Sophie Mirabella, states the impact of the carbon tax on refrigerant gases and made it clear some commercial insurance premiums would rise, according to reports in The Australian.

The Zurich note said 95% of all machinery breakdown insurance risks involved air-conditioning and refrigeration plants. Under the carbon price the cost of refrigerant gas would rise significantly at the wholesale level, including R404A gas, which would increase by $75 a kilogram – this would equate to a cost of $18,750 of carbon tax alone for an average supermarket that was restocking the gas.

“Carbon pricing will have a dramatic effect on losses,” said the Zurich note. “It does not take into consideration added costs of repairer mark ups or the costs associated with actual equipment breakdown. It should also be noted that carbon tax per tonne is not static; it will rise in 2013 and 2014.

“Due to these significant increases, we recommend brokers review the adequacy of sums insured with clients and, as with the Zurich Engineering product, ensure their current coverage automatically includes the costs associated with the loss of refrigerant gases.”

Mirabella has ceased on the opportunity to claim the insurance industry is the latest part of big business that will suffer under the price on carbon.

"This is yet another unpleasant surprise for industry already struggling under difficult economic conditions," she said.

A spokesman for Climate Change Minister Greg Combet told The Australian that the Coalition had been “running an unfounded and unprincipled scare campaign”.

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Is the carbon tax simply a cost to business to reduce risk?

The carbon tax: insurance against climate change?

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