Public inquiry set for much-anticipated reinsurance pool

Far Northern householders anticipating cuts to their insurance premiums this year will be disappointed, as wrangling between larger insurers and the government holds up progress.

Far North homeowners are yet to see any benefits from the federal government’s reinsurance pool, with a public hearing into the vexed scheme set for November 25.

Senator Nita Green intends to grill the government on delivery of the pool today in a Senate Estimates hearing.

“I intend to hold the Australian Reinsurance Pool Corporation (ARPC) and insurers to account for the delivery of the pool,” Ms Green said.

“I will be asking questions about the progress of the scheme in Senate Estimates, and I won’t hold back about what North Queenslanders are saying to me,” she said.

Cyclone Monica hit Nhulunbuy in the Northern Territory in 2006.

Ms Green said the inquiry would let insurers know they were on notice and needed to work to reduce premiums.

“I want to find out what can be done to improve the scheme, but unlike the previous government I will always be honest and upfront about what the potential benefits will be,” she said.

Legislation for the scheme passed in March this year and although the scheme started on July 1, there is an 18 month transition period for large insurers and a 12 months for small insurers.

In February, Federal MP for Leichhardt Warren Entsch said Far North Queenslanders would see savings on premiums of up to 46 per cent for homeowners, 58 per cent for strata properties, and 34 per cent for small and medium businesses.

Port Hinchinbrook – an aerial view of luxury yachts and boats that bore the brunt of the destructive winds and storm surge from Cyclone Yasi in 2011. Picture: Evan Morgan

But Ms Green said modelling used to design the cyclone reinsurance pool released in June showed those promises were not true.

Ms Green said it wasn’t made clear by the previous government that large insurers had until December 31, 2023 to sign up to the scheme.

The Joint Select Committee on Northern Australia will inquire into and report on the operation and implementation of the Cyclone Reinsurance Pool with a hearing on November 25.

Aerial view of the township of Cardwell in Far North Queensland. Ten years ago Cyclone Yasi crossed directly over the town, destroying buildings and infrastructure. The highway and the foreshore were completely rebuilt. Picture: Brendan Radke

The committee includes chair Marion Scrymgour, MP for Lingiari in the Northern Territory, Mr Entsch, Greens Senator Penny Allman-Payne and Labor Senator Patrick Dodson.

Australian Consumers Insurance Lobby spokesman Tyrone Shandiman said a report released in early October showed those in the highest premium brackets would be getting cuts of about 30 per cent to the cyclone insurance component of their premiums.

He said the public hearing was a positive move.

Pormpuraaw Rd after Cyclone Monica in 2006.

“The government released modelling at the end of the last financial year and that did mean insurers weren’t able to include it in negotiations for this financial year, so we are still not seeing it impact policy holders,” Mr Shandiman said.

“We are hoping to see it start from January 1 with the absolute majority (of insurers) finalising by the end of the financial year.

“We want to see it implemented, we won’t know what the savings are until people see it on their policy, so we’re little frustrated,” he said.

“Insurers have a role to play in the success of the pool and we hope they are working with all stakeholders to ensure implementation is as successful as it can be.”

Members of the Swift Water Response team carry out an emergency evacuation in Townsville after Cyclone Yasi in 2011. Picture: Evan Morgan

Mr Entsch said he always anticipated “there would be some rejigging”.

“There are a couple of things that need to be sorted from the insurance companies’ perspective,” Mr Entsch said.

“One of the bigger ones is treasury, in their wisdom, made the decision it has to be revenue neutral on an annual basis, which is not possible.”

He said another problem was that insurance applied to damage done within 48 hours of a cyclone being declared.

Ingham in the wake of Tropic Cyclone Yasi in 2011. Picture: Mary Brown

“This is nonsense, when Cyclone Monica hit Cape York, it had no impact whatsoever until about a week and a half later when flooding occurred, and it was very, very significant,” Mr Entsch said.

“The inquiry will enable everyone to tease out what other things we need to do to make the changes so we can get it implemented sooner rather than later.

“It’s the first of its kind, I’m not pointing my finger at the government, there’s no indication they don’t want to do it.

“We have just got to make sure we get it right, find a way to get the insurers on board sooner.”

Originally published as Public inquiry set for much-anticipated reinsurance pool