Unintended Consequences.

For years, the average person was probably unaware that a levy to fund essential services such as the fire brigade and SES was automatically added to all home insurance premiums.   They simply paid - either in a lump sum or by monthly instalment and many wondered at the insanity of the vast number of people who failed to insure their greatest capital asset - their home.

Of course there was a very unfair aspect to this way of financing essential services.   The fire brigade and SES responded wherever there was a need.  There was no question about only putting out fires in insured homes and that change by dropping the insurance levy and tacking essential service costs onto council rates got the nod from most people.

Unfortunately, spreading the load across the wide spectrum of properties has delivered serious disadvantage to those home owners who fall into the category of " Asset rich - cash poor ".  Often low income earners who bought their homes decades earlier when they cost a fraction of todays value and are now living on the basic old age pension.

The only reason they didn't insure - was that the insurance premium was out of financial reach.  Now they are finding a new charge - often several hundred dollars -  added to their council rates, making it unlikely that they will ever be able to pay even a lower insurance premium to insure their home.  In fact it will deliver " breaking point " and force some to take the market option decision.

That ensures a very new problem.   That valuable home is protected from the pensions means test while they continue to live in it, but the moment it is sold they may find themselves " too rich " for the pension, or with a vastly reduced amount.   That is often the very reason old people are stubbornly remaining in homes far too large for their needs and denying these older homes market access to reduce the housing problem.

Another phenomenon makes it unlikely that we will see a huge change in the number of home properties taking up insurance.  Decades earlier the cost of the block of land was minimal compared to the bricks and mortar erected upon it.   Today, the reverse applies and in fact very often properties change hands to enable what exists to be demolished and replaced with something commensurate with the now elevated value of the area.

If an " average " home is destroyed by fire there is a fair chance that the block of land it sits on will realise the same value as would have been asked for the house and land as a deal.  That is not an incentive for many cash poor home owners to bother to insure their properties.

Perhaps the guise of achieving a fair cost distribution for essential services was also intended to force the asset rich to re-think the reason they remain in unsuitable homes.  It has certainly delivered " unintended consequences " for many people !