Cyclone CTP clash

SGIO a better call says expert

DOUBT has been cast over a call to introduce compulsory third party-style insurance for properties in the Far North at risk of cyclone damage.

The suggestion that insurance “underwritten” by government could lead to lower overall premiums was recently made by Leichhardt MP Warren Entsch.

Mr Entsch said Prime Minister Malcolm Turnbull and Revenue and Financial Services Minister Kelly O’Dwyer were now considering his proposal.

“What I have said is that we set up a mutual (an insurance company owned by its policyholders) or we get some sort of underwriting of the catastrophe element, so just the cyclone element,” he said.

“This would be a compulsory element – everyone with a property would be expected to have it ... similar to thirdparty motor vehicle insurance.” Mr Entsch said the plan had first been suggested years ago by the Cairns Chamber of Commerce as a local strategy, and he was now pushing for its introduction across Northern Australia.

But Cairns-based Financial Services Institute of Australia senior fellow Roger Ward questioned whether this would lead to lower premiums.

“My main concern is that this will be put in place and then the insurance companies will be lowering their risk and taking even more profit with a lower risk,” he said.

“If the Government does entertain some type of risk- mitigation scheme like that, they need some type of guarantee around the insurance premiums in comparison to the southern states.”

Mr Ward said insuring a home in Cairns regularly cost owners $3000 each year, and prices of up to $7000 were “not uncommon”.

“I’d bring back the State Government Insurance Office – it’s the only not-for-profit mechanism which isn’t beholden to shareholders,” he said. “It worked very well for us for nearly a century.”