Lo­cal in­surance premi­ums to rise by up to 350 per cent

Port Douglas & Mossman Gazette - - NEWS - CHAR­LIE MCKIL­LOP

NEWS of an un­prece­dented hike in in­surance premi­ums by more than three-and-a-half times ex­ist­ing rates for strata ti­tle and body cor­po­rate en­ti­ties in North Queens­land has sent shock­waves through the lo­cal prop­erty mar­ket.

Ma­jor in­surer, Zurich Fi­nan­cial Ser­vices, says the new premi­ums will ap­ply for any strata pre­mium re­newal from Fe­bru­ary 6 in a bid to min­imise the ex­po­sure caused by a rapid ac­cu­mu­la­tion in North Queens­land res­i­den­tial strata busi­ness af­ter the exit of other in­sur­ers.

But strata ti­tle own­ers and body cor­po­rate man­agers have warned of far-reach­ing ram­i­fi­ca­tions for the lo­cal econ­omy and vowed to boy­cott Zurich in protest.

“It’s un-Aus­tralian. They can go back to bloody Switzer­land,” says a dev­as­tated John Car­ney who was host­ing an Aussie Day bar­be­cue yes­ter­day with his mates, many of whom are in the prop­erty in­dus­try, when the news fil­tered through.

“It is the worst pos­si­ble news at the worst pos­si­ble time for Port.

“Strata prop­er­ties in this town have al­ready ex­pe­ri­enced drops of 20 to 50 per cent, in some cases more than that, and re­turns have been so min­i­mal for so long, it’s quite dis­grace­ful to think this can be thrown at us now with­out jus­ti­fi­ca­tion.

“The town’s in melt­down as it is, this is go­ing to turn us into a bas­ket case.”

Mr Car­ney - who owns the man­age­ment rights of the 66-apart­ment com­plex Par­adise Links - said only last year, his body cor­po­rate premi- ums from $36,000 to $72,000.

“Last year they dou­bled it, now they want to more than tre­ble it - what busi­ness can ab­sorb in­creases like that? I’d like to know,” Mr Car­ney said.

He pre­dicted it would force a “mas­sive fire sale” by in­vestors caught up in the most chal­leng­ing mar­ket con­di­tions imag­in­able.

“There’ll be even less re­turn for those in­vestors,” he said. “They can’t sell be­cause there’s no de­mand and even if there was, banks aren’t lend­ing, and they won’t be able to af­ford to hold on so what else can they do?”

Com­mer­cial prop­erty owner Mal Phillips warned of reper­cus­sions as the in­dus­try united to ex­press its anger about be­ing used as a “cash cow” by in­surance com­pa­nies.

“I have been in­sured with Zurich per­son­ally for 30 years,” Mr Phillips said.

“For them to pull a stunt like this, they may find the back­lash is much greater than they an­tic­i­pated once bro­kers re­alise what they’re up to.”

Mr Phillips lamented the sell-off of govern­ment in­surance of­fices over the years which had left the com­mu­nity “at the mercy” of mar­ket forces.

“Their role was to keep the bas­tards hon­est so premi­ums re­mained at a level that was ac­ces­si­ble to the pub­lic while main­tain­ing an ac­cept­able level of ex­po­sure,” he said.

Cen­tury 21 prin­ci­pal Phil Hol­loway said Zurich should re­lease its statis­tics on claims made by strata prop­er­ties in North Queens­land oth­er­wise the pre­mium hike would con­tinue to be seen as the “money grab” it clearly was.

“I don’t see why we should be pun­ished for the flood­ing dis­as­ter that has hit the south-east corner of the state,” Mr Hol­loway said.

Iron­i­cally, while Zurich sought to min­imise its ex­po­sure to catas­tro­phe pay­outs in the event of a cy­clone, Port Dou­glas and Cairns had mer­ci­fully re­mained largely un­af­fected by nat­u­ral dis­as­ter.

But Zurich’s state man­ager Damien Gal­lagher has ad­vised cus­tomers the ac­tion was nec­es­sary to en­sure its prod­ucts were at a “tech­ni­cally sus­tain­able price”.

“Our own port­fo­lio has grown sig­nif­i­cantly as bro­kers and pol­icy hold­ers source the re­main­ing mar­kets avail­able to them,” he said. “In North Queens­land, strata busi­ness now rep­re­sents more than 35 per cent of our port­fo­lio na­tion­ally”.

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