Insurance prices ‘re­al­is­tic’

Port Douglas & Mossman Gazette - - FRONT PAGE - Angelique Pat­ter­son

THE Insurance Coun­cil of Aus­tralia be­lieves there is ‘‘no price goug­ing’’, just insurance premi­ums ac­cu­rately re­flect­ing the risk of North Queens­land.

Ris­ing insurance premi­ums in the strata ti­tle mar­ket are now be­ing seen across other mar­kets in­clud­ing res­i­den­tial and busi­ness.

The Queens­land gov­ern­ment has fi­nally re­sponded, sign­ing a mem­o­ran­dum of un­der­stand­ing with the ICA, which in­cluded pro­vid­ing insurance com­pa­nies free ac­cess to their ex­ist­ing and fu­ture flood map­ping and el­e­va­tion data, to en­sure ac­cu­rate premi­ums.

ICA gen­eral man­ager me­dia and com­mu­ni­ca­tions Camp­bell Fuller said it is now up to the lo­cal gov­ern­ments, such as the Cairns Re­gional Coun­cil, to pro­vide ac­cess to their data to en­sure insurance com­pa­nies have the most ac­cu­rate in­for­ma­tion.

‘‘We are work­ing with lo­cal gov­ern­ment right across Queens­land where they have their own data, en­cour­ag­ing lo­cal gov­ern­ment to share that data with insurance com­pa­nies,’’ Mr Fuller said.

‘‘For North Queens­land how­ever, flood risk is a very small pro­por­tion of the pre­mium. It re­ally is storm and cy­clone risk.

‘‘What we are do­ing is talk­ing to the gov­ern­ments about how prop­er­ties in North Queens­land can be more re­silient to the risk, one of the mis­con­cep­tions about cy­clone code build­ings is they are cy­clone proof.

‘‘The cy­clone code is de­signed to pro­tect in­hab­i­tants of the build­ing, which it has been very suc­cess­ful – the num­ber of peo­ple killed in cy­clones is quite low, but the code does not ad­dress the is­sue of dam­age to the build­ing it­self.’’

Mr Fuller said they are work­ing with state gov­ern­ment to look at how build­ings can be con­structed or mod­i­fied to be more re­silient against storms and cy­clones and re­duce the risk.

‘‘We un­der­stand that con­sumers aren’t en­joy­ing the high prices but they re­flect the risk at­tached to prop­erty in that area – one of the most dis­as­ter prone ar­eas of Aus­tralia,’’ he said. ‘‘A lot of peo­ple in North Queens­land for some rea­son don’t seem to un­der­stand in the nat­u­ral dis­as­ters of the last three-years, Queens­land has been about 50 per cent of insurance losses.

‘‘Since 1970 15 cy­clones have come within 100km of Cairns. This sea­son we can ex­pect four cy­clones to form off the coast and any one of those could cause sig­nif­i­cant dam­age. Even when Cy­clone Oswald turned into a trop­i­cal low it caused $1 bil­lion dam­age to Queens­land alone. In­sur­ers look at the risks ac­cord­ingly.’’

Another fac­tor caus­ing the ris­ing insurance premi­ums is the insurance com­pa­nies try­ing to cover the cost of risk over a smaller pop­u­la­tion in North Queens­land.

‘‘Cy­clones cause multi­bil­lion dol­lar dam­age in Queens­land across a rel­a­tively small pop­u­la­tion base, and insurance com­pa­nies are try­ing to col­lect premi­ums across com­mu­ni­ties to share the load,’’ Mr Fuller said. ‘‘When you col­lect money across a rel­a­tively small com­mu­nity that suf­fers with very high lev­els of dam­age it flows back into premi­ums. In­sur­ers look at Queens­land in par­tic­u­lar and shake their heads.

‘‘When cen­tral west Queens­land flooded in Charleville and Emer­ald, one big in­surer had col­lected $2 mil­lion in three years and paid out about $ 150 mil­lion in re­builds. The in­surer an­nounced they would no longer write new poli­cies in Roma un­til levies were built be­cause Roma had been hit by three floods in two years, and now that they have an­nounced a levy in­sur­ers have started writ­ing premi­ums again.’’

Un­til the risks are re­duced in North Queens­land, premi­ums will con­tinue to re­main high and com­pe­ti­tion low, how­ever Mr Fuller said the gov­ern­ment’s MOU has been a step in the right di­rec­tion. ‘‘The gov­ern­ment has made gi­ant steps to­wards pro­vid­ing bet­ter data and lo­cal gov­ern­ments have done their own flood map­ping for town plan­ning and in­fra­struc­ture pur­poses.

‘‘If lo­cal gov­ern­ment hasn’t al­ready pro­vided that data to the insurance coun­cil we en­cour­age them to do so, the bet­ter the data the more fine-tuned the poli­cies can be for premi­ums,’’ Mr Fuller said.

‘‘The insurance in­dus­try is very aware of con­cerns in North Queens­land and they are not ig­nor­ing them, it’s about look­ing at how best to ad­dress them from our per­spec­tive and other stake­hold­ers.

‘‘There’s not a quick fix to any of th­ese things; insurance com­pa­nies ac­knowl­edge there’s an is­sue but the in­dus­try has a re­spon­si­bil­ity un­der the law to op­er­ate on a com­mer­cially pru­dent ba­sis, in­clud­ing cap­i­tal re­quire­ments to cover risk. They are busi­nesses and those busi­ne­ses are putting their share­holder’s money up as pro­tec­tion.’’

The Insurance Coun­cil of Aus­tralia is wait­ing on a re­port to be re­leased in the next cou­ple of months by James Cook Univer­sity, an in­de­pen­dent study look­ing at strata ti­tle build­ing insurance and the prop­er­ties.

ALL ABOUT RISK: the af­ter­math of Cy­clone Yasi

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