Federal government commits to $10b guarantee to cheapen NT’s insurance premiums

The federal government has announced a $10b guarantee after a major report found more homes in cyclone-prone regions were going without insurance.

THE Morrison government has promised households and businesses across Northern Australia will pay $1.5bn less in insurance premiums over a decade, under a new scheme launching next year.

A reinsurance pool backed by a $10bn federal government guarantee will cover cyclone and related flood damage across Northern Australia from July 1 2022.

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It will cover over half a million home, strata and small business property insurance policies across the region.

It follows an Australian Competition and Consumer Commission report which last year found 20 per cent of properties in Northern Australia were uninsured, well above the national average of 11 per cent.

Levi Mitchell, 7 and Moonlight the chicken wonder through the tropical wasteland left by Cyclone Marcus. Picture: Keri Megelus

“Our plan will give more Australians in cyclone-prone areas access to affordable insurance,” Prime Minister Scott Morrison said.

“I’ve listened to our local MPs and senators, I’ve sat down with residents and discussed the issue,” Mr Morrison said.

“Homeowners and businesses have been faced with crippling insurance costs, and in some cases, can’t get insurance at all. It’s not OK, and we’re going to change that,” he said.

Cyclone Marcus pictured from space. Picture: NASA

The coverage will be generally extend to any areas at risk of cyclones, generally above the Tropic of Capricorn.

NT senator Sam McMahon said the scheme would hopefully ease pressure on exorbitant insurance premiums in the Top End.

“With insurance costs rising three times faster in the north than the rest of the country, it will provide much needed relief for Top End businesses and residents struggling under the crippling costs of high insurance premiums,” Ms McMahon said.

The extra funds mean the Australian Reinsurance Pool Corporation doesn’t need to charge higher premiums to cover one-in-100 year events such as catastrophic cyclones.

It comes after the Northern Australia Insurance Inquiry held by the ACCC last year found expensive premiums meant 20 per cent of properties in Northern Australia were opting to forego insurance, significantly above the national average.

But Labor’s Shadow Minister for Northern Australia, Senator Murray Watt said the Federal Government had promised to fix the north’s insurance crisis for eight years.

“Now they promise it again, but not until after another election,” Senator Watt said.

“The PM needs to tell people in the north how much premiums will fall and when.

“Otherwise this is just more spin and marketing to get him through an election.”

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