INSURANCE companies who “cherry-pick” postcodes and avoid covering North Queensland properties should be banned from offering policies in the rest of the country, Federal Member for Leichhardt Warren Entsch has told parliament.
Mr Entsch addressed the Chamber on Tuesday evening to reignite concerns about the “continued failure” of the insurance industry in FNQ and to put renewed pressure on the government’s review process.
The government has a deadline of October 1 to complete the series of reviews recommended by the Standing Committee on Social Policy and Legal Affairs when it tabled its second “In the wake of disasters” report in March.
“During the inquiry, I heard heart-breaking stories from people in my electorate who are suffering huge financial pressures due to the skyrocketing costs of insurance, the total un-affordability of insurance and, in many other cases, the lack of availability of insurance for their properties,” Mr Entsch told parliament.
He commended Committee Chair Graham Perrett for his report, but added that with the half-way point of the allocated period for the review approaching, he “truly hoped” good progress was being made.
Since the public inquiry took place in late January, Mr Entsch has continued to receive numerous examples of insurance quotes that have gone through the roof.
“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“This year, she was told that the insurer, Lumley, had withdrawn from domestic property insurance for all locations above Mackay.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 $4803 with Vero and $4439 with CGU.”
Mr Entsch also quoted from a letter he had received from Redlynch resident Ron Mason, whose home and contents insurance had doubled in a year.
“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,” Mr Mason wrote.
Mr Entsch said that in his view, it was blatantly obvious that the market had “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,” he said.
The government has until December 1 to outline how they will bring affordable insurance back to the region. Mr Entsch said at that time, he would 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,” he told parliament. “If they do not want North Queensland post codes, 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,” he ended.
For the Hansard transcript of Mr Entsch’s speech, click here