Insurance scheme fears

AN insurance lobby group has questioned the design of the government’s planned $10bn reinsurance scheme, warning that strata holiday units and marine businesses could be excluded.

Northern Australia Insurance Lobby has raised the concerns after meetings with the government’s reinsurance taskforce. So far much of the debate has occurred behind closed doors, with submissions to the scheme, due to start in July, not made public.

The NAIL group is headed by strata professional Tyrone Shandiman and insurance campaigner Margaret Shaw.

Mr Shandiman said the reinsurance scheme was a step in the right direction but its design was critical to ensure it was fit for purpose.

“Failure in design will mean that many policy holders will continue to have the same issues and problems that have been brought to the government’s attention over many years,” he said.

Mr Shandiman said discussions had considered whether to include or exclude Accommodation Module class strata properties, such as Hamilton Island holiday units.

He warned holiday letting would become unviable if they were excluded.

“Northern Australia relies heavily on tourism,” Mr Shandiman said.

NAIL is also concerned about coverage for small businesses and marine-related businesses, such as where a business leases premises from a property owner excluded from the scheme.

There is concern marine businesses not covered by the scheme will relocate south, where insurance is available.

“The flow-on effect of a contraction in marine business in Northern Australia is significant for towns dependent on the marine industry,” Mr Shandiman said.

The government announced the scheme in May, saying more than 500,000 residential, strata and small business property insurance policies were expected to be eligible to be covered, reducing premiums by $1.5bn over 10 years.

But Treasury officials have since revealed that savings depend on the design of the scheme and that a 10 per cent saving is the preliminary estimate, which is based on actuarial analysis.

Mr Shandiman said at least an average 40 to 60 per cent saving was needed.

Member for Herbert Phillip Thompson told a media conference on Friday the group had not raised the issues with him but that he would happy to work with them.

“The reinsurance is designed because there has been market failure here in Townsville. This is something that we must get right and this $10bn reinsurance scheme is getting designed to ensure that it can be achieved,” Mr Thompson said.

Assistant Treasurer Michael Sukkar said draft legislation would be released soon.

“The establishment of the reinsurance pool by the Morrison government will boost the resilience of Northern Australia and give people in cycloneprone areas access to affordable insurance,” Mr Sukkar said.