IAG Deputy CEO Ian Brown says while the industry has a responsibility to keep costs low for consumers, it’s also important for consumers to understand the market better.

Mr Brown, who is the new President of the Australian and New Zealand Institute of Insurance and Finance, says underinsurance is the main issue in both Australia and New Zealand, but it is due as much to a lack of knowledge as affordability.

In an interview in the institute’s journal, he says people who don’t understand the value of insurance think it is expensive and more education is needed.

He is also very critical of the state and local governments’ approach to insurance taxes.

“In certain states we’re paying taxes upon tax, with charges such as fire services levies added onto the premium plus GST on top of that, plus stamp duty.

“These additional taxes can inflate basic household insurance by almost 90%. If these charges were collected in a different way, premiums would be much cheaper.”

He says the Insurance Council of Australia is trying to educate the various state and local governments about this, but “as an industry we have a responsibility to keep our costs low, anyway”.

Mr Brown also says insurers should start to reserve for future claims due to increasing risks such as storms and changing weather patterns. “Currently there is not… sufficient knowledge or co-ordination throughout the industry to ensure that when the next big disaster occurs, we as an industry are prepared for it.”