A progressive policy with lower out-of-pocket costs and a better guarantee than life insurers will be cheaper than a policy with more coverage but higher premiums, according to a study.
The report found that if a policy was available on the market in 2020 and a person were to buy a policy in 2020, the policy would be more expensive than a similar policy with the same benefits, but lower in benefits and lower out of pocket costs.
It is the first time researchers have looked at the effect of progressive renters policies in Australia.
The research, published in the Journal of Consumer Research, found that a policy that costs less than $10,000 a year and covers a minimum of three years was cheaper than the same policy with a higher cost.
“The data suggests that there is an upside to a progressive policy.
We found that the policy with greater benefits was more affordable,” Associate Professor Adrian O’Sullivan, from the Department of Social Sciences and Humanities at Monash University, said.
“This suggests that if you are thinking about buying a policy, it is important to compare your costs with other options.”
The study found that while a policy might be cheaper for many, the data also showed that the higher a policy’s premiums, the higher the total cost of coverage.
Professor O’Sullivans findings were backed up by a review of the literature.
Professor Mark Scott, who led the review, said that there was a “lack of evidence” about how progressive renters’ policies work.
“There is no clear evidence of the policy’s effectiveness for people with higher levels of social disadvantage, low income, older people, disabled people or those with pre-existing conditions,” Professor Scott said.
Professor Scott also said the results did not support the assumption that the lower cost of the policies would offset the higher costs of the coverage.
“We found that when we took into account the cost of benefits and out-pocket cost, the impact of the higher premium was offset by the lower premiums,” Professor O’sSullivan said.
The study is the result of an extensive review of research conducted by Professor O Sullivan, Professor Mark Brown, from Monash, and a number of other experts.
Professor Brown said the research found that it was difficult to draw a clear conclusion from the research.
“One of the things we found was that policy costs are lower for people who already have affordable housing, and for people in housing that are in the same condition,” he said.
This was particularly the case for people without an income of more than $70,000.
Professor Wilson said the study could help people think about buying progressive renters.
“They may be thinking about what is the right policy for them, whether they have to pay a premium, whether the policy is more expensive, or whether the cost is less,” he told The Conversation.
“But there are no clear guidelines or evidence-based recommendations on what is a good policy for a policy.”
Professor Brown also said there were a number options for policy makers to consider.
“Policy makers could consider the affordability of the benefit package and decide which benefit they would like to offer, or the coverage,” he added.
“For instance, they could consider whether the premium is higher for older people who are older and have more limited access to the public transport system, or for people on higher incomes who are younger and do not have as many public transport options.”
Prof Brown said policy makers could also consider whether it was appropriate to offer a higher benefit for people living with a disability.
“It could be useful for people that have disabilities to get more coverage, so they can get to the gym more often, or access other benefits like a discount for driving to and from work,” he explained.
“That could be a good way of providing more coverage for people like this.”
For more information, please visit the AER website.
Topics: housing-industry, community-and-society, affordable-housing, health, australia