PM pondering cyclone mutual

PRIME Minister Malcolm Turnbull is “sympathetic” to underwriting a cyclone mutual insurer to reduce premiums and boost market competition, North Queensland MP Warren Entsch says.

But the revelation has set alarm bells ringing for insurers who claim mitigation is the only answer.

The issue has been simmering since the release of the Northern Australia Insurance Premiums Taskforce report last year, which backed mitigation and warned a mutual or reinsurance pool could cost the Government billions of dollars.

But the Government has yet to respond and has been lobbied by Mr Entsch and other North Queensland MPs.

Mr Entsch said events around Cyclone Debbie highlighted the problems.

“There were many businesses who couldn’t get insurance or couldn’t afford it,” he said. “The Prime Minister has confirmed with me he very much sees my argument after seeing the aftermath of Cyclone Debbie and that he is very sympathetic with my position.”

Mr Entsch hoped the Government would have “something out very shortly”.

He has worked with mutual manager Regis and UK reinsurance broker Willis Re.

Regis told the taskforce there were “compelling advantages to introducing a mutual component to cyclone coverage in Northern Australia”.

These included increasing competition and investing in education and mitigation. But insurer Suncorp says a mutual is unfair to taxpayers and that the solution is investing in mitigation, building stronger homes and improving building codes in cyclone areas.

“Reducing the risk leads to increased competition and significant price reductions in premiums,” Suncorp Insurance CEO Anthony Day said.

“A government mutual would merely paper over the cracks.

“Mr Entsch’s proposal for a mutual scheme, propped up by all taxpayers, is not in the na- tional interest and will not serve people living in Northern Australia in the long term.”

Last month a spokeswoman for Minister for Revenue and Financial Services Kelly O’Dwyer said: “These are complex issues which the Government is carefully considering. In the meantime, there are immediate actions the Queensland Government could take to reduce premiums including removing stamp duty and addressing strata title regulations which place pressure on premiums.

“Additionally, the Government has clearly communicated to insurers that they must ensure any mitigation efforts undertaken by consumers are being reflected in the premiums being charged.”