‘Cautiously positive’ Townsville Chamber analyses latest insurance report for NQ
A new insurance report shows positive signs for cyclone-prone regions, but a Townsville business leader warns that the “market failure” is continuing. Here’s why we’re still paying too much.
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A lack of competition, transparency and accountability are keeping insurance costs high in Townsville, North Queensland business leaders have revealed.
The Australian Competition and Consumer Commission’s (ACCC) fourth report into the Cyclone Reinsurance Pool has highlighted an 11 per cent drop in insurance premiums for customers facing medium to high risk of cyclone, now that all eligible insurers were participating.
However, the Townsville Chamber of Commerce believes there is still “clear market failure” in the region.
“Premium reductions for home and contents insurance were most prominent in coastal areas of north Western Australia and north Queensland, particularly in Mackay, Cairns, and Townsville, where the median premiums reduced by approximately 15 per cent,” the ACCC said.
The pool’s impact on strata insurance was less pronounced overall but for those in Townsville paying the highest premiums saw the largest decrease of 28 per cent.
The average small business (SME) premium per $100,000 sum insured in medium to high cyclone risk areas decreased, with North Queensland dropping 18 per cent over the last year.
Despite this, small business insurance remains more expensive on average across northern Australia than in the rest of Australia.
Townsville Chamber of Commerce chief executive Heidi Turner was “cautiously positive” and said the report confirmed what the chamber had maintained for years, that “insurance affordability remains a critical challenge”.
“There is still a clear market failure in northern Australia, and access to affordable cover remains out of reach for many. We noted some inconsistency in the data on home insurance (and) premiums remain high and are still rising across much of northern Australia, despite signs of improvement in some areas,” Mrs Turner said.
“While some members have seen reductions in strata insurance, this is not consistent across North Queensland. Premiums are still significantly higher in the north than in other parts of the country, and we continue to be taxed twice on what is an essential service.
“We remain concerned with underlying problems like lack of competition, transparency, and accountability in the Northern Australian market that haven’t been resolved.”
There was a growing frustration as businesses continued to hurt and insurance costs continued to rise, with many increasing their excess or cutting back on cover to reduce costs, leaving them exposed.
“We can’t say it enough, insurance is essential to live and do business here. Without affordable and accessible insurance, businesses can’t borrow, employ, or invest and the economy suffers,” she said.
With the legislated review of the cyclone pool due this month, the Chamber will continue its advocacy for ambitious reforms to fix northern Australia’s insurance “market failure”.
“Deeper reform is needed, starting with the removal of double taxation on insurance: GST and stamp duty on already unaffordable premiums. It’s extremely unfair that businesses in higher-risk areas are paying more tax for the same level of cover,” she said.
“We’ll continue to push for meaningful change and advocate for the inclusion of currently excluded assets, like commercial buildings over $5m, fixed marine infrastructure, aged care facilities, and continue our call for the removal of all taxes and levies.”
Townsville Chamber continues to advocate for:
• National risk-sharing: Requirement for all insurers to operate across Australia to balance risk and improve competitiveness.
• A government baseline insurer: The chamber is advocating for a government low-cost baseline insurance so more people can afford essential cover
• Transparency and accountability: Savings need to be passed on, and research must be based on actual policy renewals, not just online quotes.
• Removal of all taxes and levies: 10 per cent GST is paid with another 9 per cent stamp duty on top. Stamp study is also paid on the GST component.
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Originally published as ‘Cautiously positive’ Townsville Chamber analyses latest insurance report for NQ
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