Commonwealth to question greedy insurance price hike
A FEDERAL Government inquiry into the insurance industry holds some hope for local owners of strata-titled units who have been stung by an unprecedented rise in their premiums.
The inquiry will look at the level of insurance in disaster-prone areas and consider whether the Government needs to establish a federal backup insurance scheme for individuals or companies unable to obtain or afford insurance.
The office of the Queensland Deputy Premier Paul Lucas told a local property manager the inquiry would investigate a number of issues relating to strata title units, including “whether there is a role for the Commonwealth Government in providing disaster insurance or reinsurance to the private sector”.
The Deputy Premier’s senior policy advisor said she was “alarmed” by the dramatic increase in premiums and said the Federal Government “is concerned that appropriate national measures are in place to foster more complete sharing of risk and equitable sharing of the cost of damage and loss resulting from floods and other natural disasters”.
Options being considered by the inquiry include subsidising insurance for individuals and small businesses in areas where premiums are highest.
However, the inquiries will not provide any immediate relief.
Local property owners have been slugged by sky-rocketing premiums over the past few months.
Premiums were already heading through the roof in January, before record-breaking floods and Australia’s largest ever cyclone devastated Queensland, with insurance giant Zurich boost- ing rates by a massive 350 per cent.
“A reinsurance scheme similar to what exists in New Zealand would be a good idea,” Paradise Links resort co-owner John Carney said.
“They have a natural disaster fund, so when something like the Christchurch earthquake hits, the reconstruction is paid for out of the fund.
“I think insurance companies are having a lend of us.
“There haven’t been any disasters up here, no big claims for 20 years, but our premiums doubled last year.
“I dread to think what our next quote will be.”
The current Queensland Government flood inquiry is also probing the insurance industry.
The focus of the Queensland inquiry, however, is on whether companies have been honouring their flood policies rather than on the price of those policies.
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