How state can fix looming insurance disaster

 

THE State Government is being called on to reconsider how stamp duty is calculated for insurance, amid concerns Queensland will face an insurance crisis in the wake of another major natural disaster.

Greater Whitsunday Alliance chairman John Glanville said premium increases of up-to 500 per cent were making doing business unaffordable.

"There's certainly very much a concern that it's (crisis) already here … but will turn into a crisis if we have another major event in a reasonably populated area," he said.

"What's happening in northern Australia generally is the insurers are either a) saying we don't insure up there or b) they are pricing themselves out of the market."

It follows a recent report from the Australian Competition and Consumer Commission that found home, contents and strata insurance was becoming decreasingly affordable in northern Australia.

John Glanville, chairman of the Greater Whitsunday Alliance
John Glanville, chairman of the Greater Whitsunday Alliance

The body has previously recommended scrapping or re-basing stamp duty for those insurance products.

Mr Glanville said the Government could "take some pain" away from the regions by changing the way stamp duty is calculated.

"It's difficult now to find insurance in many areas from more than one insurer," he said.

"It certainly requires action in the very near future (from State Government)."

The chairman also said the Federal Government could legislate so insurers were required to have a "risk spread".

"If they have a geographic risk spread, the reality of that might be that somebody down south might pay a little bit more … but it means that everybody in Australia is covered," he said.

Cleanup in Hermit Park after the Townsville floods
Cleanup in Hermit Park after the Townsville floods

A State Government spokesman said the insurance industry was regulated by the Federal Government.

"Queensland has the same stamp duty arrangements on insurance as other states," he said.

"The rate of 9 per cent is in line with the rate charged by other states following its increase from 7.5 per cent by the Newman LNP government.

"When insurance premiums are rising by 40 per cent removing stamp duty of 9 per cent won't fix the problem.

"And if we removed stamp duty there is no guarantee that insurers won't simply see as it an opportunity to increase premiums even more - it is not a long term fix."

A damaged home in Yeppoon after Cyclone Debbie
A damaged home in Yeppoon after Cyclone Debbie

The spokesman said the recent announcement by Michael Sukkar that the Federal Government was actively considering a north Queensland reinsurance pool was welcome.

"The final report for the ACCC's Northern Australia Insurance Inquiry is expected to be delivered to the Federal Treasurer in November 2020," he said.

"The Palaszczuk Government will carefully consider any recommendations relevant to Queensland put forward by the final report."


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