Do insurers have a social responsibility to their policyholders? Most major insurance CEOs might say no. But any widespread moves to divest themselves of every piece of unprofitable business and/or impose big rises on personal lines could lead to the sort of philosophical battle the banks have fought and lost. WA Premier Geoff Gallop last week criticised AMP General for closing off its personal lines cover in the state’s northwest because cyclone-related payouts have made the business unprofitable.

Personal Insurance Director Greg Sanderson has written to policyholders advising: “The premiums we need to charge you are considerably higher than those previously offered, and are well above those which customers are generally prepared to pay.” What that charge might be he didn’t say.

Calling for all insurance companies to treat regional customers in the same way they do their urban counterparts, Mr Gallop said: “Of course it’s a business, but it’s a business which has social responsibilities.”