‘Not seeing premiums come down’: Cyclone reinsurance pool reality
Experts say the cyclone reinsurance pool isn’t working fast enough, and changes are needed to rescue the region from extreme costs. See how.
Townsville
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Major architects of the cyclone reinsurance pool are calling for faster and stronger changes, after a sluggish and unsuccessful launch of the pool.
The cyclone pool commenced operations on July 1, 2022, designed to remove high insurance costs which ballooned across Northern Australia after Cyclone Yasi.
Townsville Chamber of Commerce president Chris Rockemer said an economy can’t run without affordable insurance.
“It’s been 18 months now since the cyclone reinsurance pool began, and we’re not seeing premiums come down,” Mr Rockemer said.
“The reason no medium-density high-rise unit blocks have been built in Townsville in the last 10 years, is because of insurance costs … without insurance, you can’t get a mortgage, you can’t build, you can’t run a business.”
The cyclone reinsurance pool was created to help northern insurance companies absorb the impact of cyclone and flood disasters.
“You as the customer still buy your insurance off Suncorp, for example,” Mr Rockemer said.
“And Suncorp buy their insurance from the government.”
Mr Rockemer said the best way to get premiums down was through market participation.
“We need to think about making it mandatory that if you insure in Australia, you insure everywhere,” he said.
Mr Rockemer said if forcing insurance companies into Northern Australia doesn’t work, then the last resort was creating a government-owned insurer.
Standing with the Townsville Chamber of Commerce on Wednesday, September 20, was NQ Insurance Brokers’ Paul Glasby and the Katter’s Australia Party.
They wanted more insurance companies in North Queensland, better oversight by the ACCC, and a removal of the stamp duty tax on repayments.
Kennedy MP Bob Katter said the ACCC and ASIC need to “get off their fat backsides”.
“There was enormous rage when insurance went up after Yasi,” Mr Katter said.
“(This year) we have seen a lowering – but it’s nowhere near where it should be, but Allianz has gotten pretty close.”
Mr Katter said the job was not over yet.
“ASIC and ACCC, they are paid to go in and see that people are not being ripped off by large corporations,” he said.
“They have done nothing.”
Traeger MP Robbie Katter said he would be challenging the Queensland Government to cut stamp duty tax from insurance payments.
“When you have people saying their insurance have gone from $4000 to $12,000 – it’s a big issue,” he said.
“It’s well within the government’s power to cut stamp duty.”
NQ Insurance Brokers business development manager Paul Glasby said stamp duty accounted for about 10 per cent of insurance costs.
“When they brought in GST, stamp duty was meant to be phased out, but certain states kept it going,” Mr Glasby said.
Federal assistant treasurer Stephen Jones is responsible for the reinsurance pool.
He’s currently in Europe and was unable to talk with the Townsville Bulletin, but his office said the Albanese government is committed to delivering affordable insurance to Northern Australia.
“The Australian reinsurance pool corporation (ARPC) is engaging with major insurers and we are confident in the progress made towards the December 2023 deadline, which major insurers must join by,” a government spokesman said.
Herbert MP Phillip Thompson helped design the cyclone pool, and agreed with the Katters.
“The new government is just not working fast enough,” Mr Thompson said.
“We need the minister to not take his eye off the ball, so people aren’t being punished for needing insurance.”
Customer achieves 40 per cent saving on home and contents insurance
Mr Thompson said stamp duty should be removed, and he’s asked for it before.
“It can be done with a stroke of the pen, we’ve asked for it, but we don’t often get a reply. Maybe because the premier is always overseas,” he said.
“The (federal) government needs to have a view of punishing insurance companies if they’re not in the pool.”
The state government has previously said that if the reinsurance pool works and reduces premiums, stamp duty would also be decreased.
The cyclone pool was first adopted by Allianz Insurance.
As of July 2023, Allianz had been joined by QBE and Suncorp – representing three of the major four insurers – plus smaller insurers like RACQ and Sure Insurance.
The largest general insurance company in Australia, IAG (which operates NRMA, CGU and WFI), hasn’t signed up yet.
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Originally published as ‘Not seeing premiums come down’: Cyclone reinsurance pool reality
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