ON THE SOAPBOX Insurance crisis is getting worse
I N ALL my time in politics, few issues have required as much perseverance, or generated such a surge of community support, as that of working towards a way out of the North’s property insurance crisis.
When people are forced to leave their most valued possessions - their homes and their businesses - uninsured and unprotected, it beggars belief that those at the highest levels can continue to deny there’s a problem.
The Private Member’s Motion that I have drafted is comprehensive, seeking to address a range of issues including the availability and affordability of policies, the legal requirement for mortgage insurance, the financial and personal stress on families, and the need for investigation into government underwriting of insurance. It is now awaiting approval.
Unsurprisingly, it has already met with resistance from the Insurance Council of Australia, which has reit- erated that it doesn’t believe there is a problem. This ’head in the sand’ attitude is proving to be extremely damaging.
From across Northern Queensland, I have been contacted by home owners, landlords, businesses, rural properties and tourism icons. For many, the issue is now not about huge increases, but about finding any cover at all after being repeatedly rejected by both domestic and international insurers.
In Cooktown, the Hillcrest Guest House has been uninsured since January, and the iconic Lion’s Den pub since March, both unable to get any cover due to their location.
Cairns property manager Linda Tuck tells me that insurance with Vero on her residential home has gone from $900 two years ago to $2929.72 with a $1000 excess. Yet quotes using an identical property, but in different postcodes, reveal that cover in Perth, Melbourne or even flood-ravaged Brisbane would cost between $1200-1300. And surprisingly, in Darwin, insurance could be purchased for $1633 - despite cyclone Tracy in 1974 almost destroying the city.
I have passed on many of these case studies to illustrate not only people’s financial challenges, but the emotional toll they face in struggling to find cover for their properties. I dare the ICA to repeat, “There is no problem” after reading these.
Concern has also been raised about the financial implications of what is seen as “government interference” in the insurance industry. What many people don’t realise, and the industry/government is unwilling to publicise, is that within the last decade the government has already intervened in the insurance industry - and successfully.
In 2003, following the attacks of 9/11 and the withdrawal of terrorism insurance cover by insurance companies, the Howard Government established a scheme for replacement terrorism reinsurance for commercial properties.
The scheme just been positively reviewed for the third time, with the Government directing the pool to pay a dividend to the Commonwealth of $400 million.
Now, there is little doubt that there has been market failure in the provision of property insurance in Northern Australia. My question is, why can we not get access to these funds - or a similar mechanism - to help people living above the Tropic of Capricorn, so they can afford insurance until such time as the premiums drop again?
It is not intended as a long-term solution - ideally we want, and need, a private industry that is both affordable and sustainable. However, for a relatively short-term solution, it has merit and should be properly investigated.
It is clear that something needs to be done, and soon, which is why I will continue to fight for equal access to property insurance for Northern Queenslanders.