NEWS that strata properties in North Queensland are paying five times more for insurance than those in southern cities clearly shows market failure, says Leichhardt MP Warren Entsch.
“The Australian Government Actuary’s report is fantastic we’ve known for a long time through anecdotal evidence that we are paying too much, but now we have hard data that finally confirms the massive discrepancy in premiums,” Mr Entsch said.
“Yes we get cyclones in North Queensland, but there are floods, fires and storms in these southern cities which carry their own significant level of risk and it’s certainly not one-fifth of ours. That’s not justifiable in anyone’s book.”
Mr Entsch said the AGA was “spot on” with its findings about the lack of competition in the North Queensland market, recognising that insurers were either actively avoiding exposure in the market, or if already in the market were not interested in growing their share.
“This is the reason why we’ve seen these obscenely high premiums being quoted it’s not based on any credible formula for risk, it’s simply the insurance company’s way of encouraging people not to take their policy.
“At the same time, people are under huge personal stress at the thought of losing their homes and businesses because they can’t afford to pay for insurance. This just illustrates the bloody-mindedness and total lack of compassion of these insurance companies.
“Obviously, increasing competition in the market is the key and that’s why this aggregator website will be so effective. If insurers don’t come to the party then we have the option of legislating that every insurance company that is registered with APRA must have their policies available for comparison and purchase through an aggregator website.
“The insurers hate this idea and that tells me that it will be good for consumers.”
Mr Entsch welcomed the decision of the AGA to now examine home and contents insurance, but he added that it would be also highly beneficial to look at business insurance.
“At the Northern Australia Committee hearing in Brisbane last week the Queensland Chamber of Commerce and Industry gave evidence that businesses are facing increases of up to 2500 per cent on insurance.
“There’s no doubt that the insurance cancer has now spread right across the spectrum.”
The Government is still accepting submissions to its Discussion Paper on Insurance in North Queensland and the paper is available at http://www.treasury.gov.au/ConsultationsandReviews/Consultations
Submissions should be in Word or PDF format and emailed to firstname.lastname@example.org Full contact details such as postal address and phone number must also be included.