Insurers review carbon price hikes

The impact of carbon pricing on the cost of refrigerant gases has led to a review of commercial insurance premiums.

Insurer Zurich Australia has issued a notice to its agents calling on them to review clients’ coverage.

In the note, Zurich warns that carbon pricing will significantly increase the repair costs of gas in commercial cold storage and air conditioning units.

The note also claims that 95 per cent of all machinery breakdown insurance risks involved air conditioning and refrigeration plants.

Since July 1 there has been massive price hikes for refrigerant gas with R404A rising by $75 a kilogram.

This increase equates to an additional $18,750 for the average supermarket to restock gas as a result of the carbon tax.

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

Opposition industry spokeswoman, Sophie Mirabella, said the note reveals the “new and emerging costs” of the carbon tax.

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

A spokesman for the Climate Change Minister, Greg Combet, pointed to Treasury modelling showing that the impact of refrigeration and insurance costs on the cost of living are modest.

Another insurance issue that has emerged in recent weeks as a result of the carbon tax is public liability insurance.

A refrigeration contractor, who has requested anonymity, said his insurer is concerned about the move to natural refrigerants, which are highly flammable and toxic.

“My insurer is concerned about poor installation, lack of safety, explosions and the need for technicians to update their skills,” he said. “There is no way a contractor will install a system without insurance.”

Another issue is building insurers refusing to cover ammonia, which has been the source of a number of injuries.

Natural refrigerants training has begun across Australia to up-skill technical knowledge of hydrocarbons, carbon dioxide and ammonia, which are replacing synthetic refrigerants such as HFCs with high global warming potential.