The insurance market has failed regional Queenslanders, with some unable to get insurance while others pay “20 times” as much as property owners in Brisbane and Sydney for cover, a Senate committee has been told.
Legislation is before federal parliament to establish a reinsurance pool for cyclone and related flood damage, as part of a government pledge to ensure Australians in cyclone-prone areas have access to affordable insurance.
More than 880,000 residential, strata and small business property insurance policies in northern Australia are expected to be eligible to be covered for risk of cyclone and related flood damage, the government says.
Northern Australia Insurancexjmtzyw Lobby chairman Tyrone Shandiman, whose group represents consumers, said he broadly supported the legislation as a way to make insurance cheaper and more available in northern Australia.
But he remained concerned about who would be eligible.
“We just don’t know what impact the reinsurance pool will have on policyholders not covered by the insurance pool,” Mr Shandiman told a Senate, Economics Legislation Committee hearing on Tuesday.
“There are some things we feel need to be tweaked not necessarily immediately, but in future reviews of the legislation.”
Mr Shandiman said his group believed the reinsurance pool should be the government’s way of addressing failures in the insurance industry.
“We definitely agree there is a market failure,” he said.
“We are coming across clients that can‘t get insurance, they are paying 20 times as much for insurance in their properties that are similar in Brisbane and Sydney, with $500,000 cyclone excesses.
“If that’s not a market failure, then I’d hate to see what a market failure actually was.”
The reinsurance pool will backed by a $10 billion annually reinstated Commonwealth guarantee and aims to ensure Australians in cyclone-prone areas have access to affordable insurance.
The hearing is continuing.
