Cyclone Reinsurance pool hearing provides clarity on next steps for insurers

Businesses in Far North Queensland say insurers are pushing through the biggest price hikes in history as some consider closing their doors permanently.

Businesses in Far North Queensland say insurers are pushing through the biggest price hikes in history as some consider closing their doors permanently.

In the locality of Speewah, off the Kennedy Highway on the Tablelands, Speewah Tavern owner Michele Woods said insurance premiums for her business had skyrocketed by almost 50% to $34,000.

Now she is considering selling.

It comes as Far North Queensland prepares to batten down the hatches, with the Bureau of Meteorology forecasting an increase in cyclonic weather this summer.

Last month’s hearing into the Cyclone Reinsurance Pool held little for owners to cheer about, however deputy chair MP Warren Entsch said there was progress being made.

And small businesses are feeling the strain as insurance premiums go through the roof, despite their roofs well and truly remaining in place.

The owner of the Speewah Country Tavern received a shock when opening her annual insurance bill, discovering the insurance premium had increased a staggering $10,000 in just 12 months. Speewah Country Tavern staff member Myee Maxfield. Picture: Brendan Radke

The Speewah Tavern has 10 rooms, a service station, and pub restaurant.

Ms Woods said she had only recently seen the largest-ever spike in her premiums – a whopping $10,000 increase.

“This is the largest jump we have seen, we started at $22,000 then up to $23,000 then $24,000,” Ms Woods said.

“Then this year it was $34,000, this is daylight robbery.

“Now I’m thinking of selling as I’m just working for the insurance companies.”

Homeowners also have been hit by year-on-year rises to their insurance premiums, all without major natural disasters hitting the Far North.

And they are becoming increasingly frustrated by the lack of parity for insurance across the Australian market.

Jacquie Ismalun has a three bedroom home in Trinity Beach and has been disappointed by the constant increases, despite shopping around for better deals in the past.

“Insurance has been climbing every year, since (Cyclone) Yasi especially,” Ms Ismalun said.

“We switched to Youi, had awesome rates, brought all my insurance across, which included around ten policies in total and then after two years our home insurance increased by $1000 a year.

“Oh and we have never ever made a claim as well, which is very disappointing.”

Ms Ismalun was able to find some relief this year by switching providers once again to Sure, saving $1300 in the process.

Damage at Kim and Josh Miller's house after Severe Tropical Cyclone Marcia in 2015. Picture: Contributed

Deputy chair of the Joint Select Committee on Northern Australia MP Warren Entsch – the committee conducting the reinsurance pool inquiry – said overall the hearing was very positive and created a path moving forward for insurers.

“One of the things that came out, which was very welcome, was that the insurance companies in all, said that the reinsurance pool was the best way forward,” Mr Entsch said.

“There are obviously things that need to be tweaked, but we’ve identified what we need to do to start to bring insurance companies on board.”

And insurance companies are beginning to take the steps to get involved in the pool.

“They have until the end of next year but we have Allianz already saying they will be coming in board in January,” he said.

“They need time to transition into the pool, but others there have said that if we get the tweaking done they were prepared to come in June as it ties into their cycle.”

Ingham in the wake of Tropic Cyclone Yasi. Picture: Mary Brown

Mr Entsch said the recommendations from the hearing will be presented early next year and will offer more clarity for insurers moving forward.

“When we put these recommendations up the insurance companies will then look to see what kind of savings they are able to offer,” he said.

“The outcome that I’m looking for is affordability and accessibility, based on some sort of parity with what other people across the country are paying.”

Far North Queenslanders still face higher premiums than most of Australia despite other areas of the country recently facing greater challenges from weather compared with Australia’s north.

The response from insurers on prices that the Far North has cyclones simply won’t cut it for consumers who wish to secure their homes and belongings.

Carnage at Port Hinchinbrook after Cyclone Yasi in 2011.

Peter Robinson from Yorkey’s Knob recalled a public meeting organised by Warren Entsch that featured insurance industry groups that he was present at a number of years ago while the reinsurance pool was being developed.

Mr Robinson recounted an exchange where he challenged an assertion that insurance in the Far North was expensive because of the prevalence of cyclones.

“A few years ago Brisbane had a thunderstorm in the Gap/Ashgrove area where lots of trees came down and damaged homes,” Mr Robinson said.

“None of the damaged houses were damaged by the actual wind but by damage from falling trees.

“We’ve got suburbs with almost no big trees, you’ll find some in the hills or in parks but no one would plant one in their yard because we get cyclones and it would fall on your house.

“The man from the Insurance council didn’t quite get the point I was making and said, but they don’t get cyclones.

“So I asked, why do we pay more for insurance than those in the Gap that were damaged from trees falling and not wind damage? When they have an identifiable and historically recorded risk of trees falling on homes, but he still said it’s because we get cyclones.”

Originally published as Cyclone Reinsurance pool hearing provides clarity on next steps for insurers