PM announces $10b guarantee to cut Far North insurance prices
Addressing the huge increases in insurance over the past few years, Prime Minister Scott Morrison said in Cairns today that his government was launching a 50 per cent saving on insurance premiums on the horizon with a reinsurance pool to the tune of $10 billion.
The reinsurance pool will be launched in July 2022, and backed by a $10B government guarantee; it will cut premiums in Northern Australia by more than $1.5B for households, strata and small businesses. It is expected to slash bills by up to 50 per cent.
“This is something I know people right across Australia's north, but particularly in north Queensland, and particularly the Federal Member for Leichhardt, Warren Entsch, has been arguing for some time,” said Morrison according to a transcript from the Prime Minister’s office following a radio interview.
“We've listened to people very carefully. And what this does is it basically puts a floor underneath the insurance industry up in north Queensland and that will encourage more insurance companies into the market, which is very important to drive down the cost of those premiums.
“Now, the government hasn't said 50 per cent. That's what others are speculating. We have a more cautious view about that. But let's just see how that plays out. But what's important is we've got to put that $10 billion of guarantee on the insurance sector up there so we can get more companies in.”
Morrison said there is a $40 million program, which is a pilot program for strata title resilience to deal specifically with the problems that we've seen, especially up there in north Queensland on strata title arrangements.
“So this is very practical. It's a real problem. I know it's been a cause of great concern in the North for a very long time, and this is necessary to ensure that people continue to be able to live and work in north Queensland.”
Morrison said this is a difficult issue to solve.
“It’s easiest to say it's not usual for the government to get into these areas. But there is a very special need in northern Australia. We're serious about supporting northern Australia as a place to live, a place to work, and for people to raise their families and live their lives.
“And this is one of the practical things we've got to do to ensure that that lifestyle can be maintained,” according to the transcript.
Responding to the question of body corporates, which has been a real issue for particularly people in tropical north Queensland, Morrison said what this involves is a three-year resilience pilot, set at $40 million to reduce cyclone risk for residential strata properties in northern Australia.
“They face some of the most acute insurance affordability pressures in northern Australia. In 2018-19, the Australian Competition and Consumer Commission (ACCC) said the average strata premium was $6,800 in north Queensland, compared with an Australian average around $3,300.
“So they have few options. So what is needed to lower that risk and lower those premiums to reduce the expected damage caused by natural hazards.”
Entsch, meanwhile, said this is an absolute game changer for families and businesses in Cairns and right across Far North Queensland.
“The high cost of insurance has been absolutely crippling to so many households and businesses,” Mr Entsch said.
“This announcement will drive down insurance prices, put more money in people’s pocket and give Far North Queenslanders the ability to actually insure their home, unit or business.
“The Morrison Government has listened, it has acted and is going to deliver real outcomes for Far North Queenslanders.”
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