I rise this evening to raise serious concerns about the continued failure of the insurance industry in Far North Queensland.
Some two months ago the Standing Committee on Social Policy and Legal Affairs tabled its second In the wake of disasters report after a comprehensive inquiry into the affordability of strata title insurance in Northern Australia.
During the inquiry I heard some heartbreaking stories from people in my electorate who are suffering huge financial pressures due to the skyrocketing costs of insurance, the total unaffordability of insurance and, in many other cases, the lack of availability of insurance for their properties.
These are people whose homes and investment properties had, in many cases, not
been affected by either Cyclone Larry or by Cyclone Yasi, yet the insurance companies in the north had determined to penalise these owners, taking absolutely no notice of ameliorating circumstances such as topographic location, the age of their homes or standard of maintenance.
The report was tabled and it was a very good report. The previous speaker was involved in it, and I commend him for his outstanding efforts. When the report was tabled, I was pleased to see that it contained some substantial recommendations, including that the government:
- investigate the risk assessment methodologies of insurance companies;
- examine the reasons for the lack of competition;
- and check whether improper or anticompetitive behaviour
was taking place.
A deadline of 1 October was given to complete the reviews. At this point we are approaching the halfway point of the allocated period and I truly hope that progress is being made.
Since the inquiry in late January I have continued to receive evidence of insurance quotes that have increased up to 800 or 1,000 per cent. They are the ones that can still get insurance. Many of the insurance companies are not providing any cover whatsoever in this region.
One letting agent in Cairns, Linda Tuck, reported that last year the cost of insurance for a two-bedroom, one-bathroom duplex with a value of around $350,000 was $941.
This year she was told that the insurer, Lumley, had withdrawn from domestic property insurance for all locations above Mackay. With only two insurers willing to quote, the prices jumped to the ridiculous level of $4,803 with Vero and $4,439 with CGU.
Redlynch resident Mr Ron Mason got off relatively lightly, yet his home and contents insurance has still doubled in the space of a year despite the fact that he lives on a hill well above any potential flood zone.
Ron was astounded to be told that the increase was due to ‘the reassessment of risk after a number of natural events’, and worse, ‘a commercial decision to recover losses incurred’.
Mr Mason wrote to me in disgust and said:
“I consider myself now speaking for thousands of people in North Queensland who are becoming aware of this institutionalised financial discrimination based on localised hardship. This is far from the Australian way.”
In my view it is blatantly obvious that the market has clearly and totally failed. These companies are acting in a discriminatory way in Northern Australia and what they are doing is, I believe, both criminal and disgusting.
There is no doubt that they are price gouging. We have to stand up and say that this is not good enough. What makes me so angry is that it is the mums and dads, small investors and pensioners who are paying the price.
After the report’s recommendations were released I urged the insurance companies to show some social obligation, have a heart and provide affordable insurance. I thought that would be more preferable than waiting for government intervention, but it appears that I was wrong.
The review was originally on strata insurance, but now the pain has spread across all areas of Northern Australia from bed and breakfasts to rural properties and landlord insurance.
The government has until 1 December to outline a way that it can bring affordable insurance into the region. At that time I will be demanding that insurance companies
who cherry-pick based on postcodes as a way of minimising market exposure spread their risk across the spectrum, otherwise I will be strongly advocating that they be prohibited from selling insurance across the country.
If they do not want North Queensland postcodes they should not have the opportunity to provide insurance anywhere in this country. It is an absolute disgrace what they are doing and they need to be held absolutely accountable for these practices.