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January 11, 2024

Katter’s Australian Party leader and Traeger MP Robbie Katter says North Queensland home insurance policy-holders should be paid a subsidy funded by levies on insurance premiums in South East Queensland as a stop-gap measure until the cyclone and cyclone-related flood damage reinsurance pool has a significant impact on premiums.

Large insurers are required by law to have signed up to the Reinsurance Pool by December 31st 2023, while smaller insurers have until the end of 2024. However, according to the Australian Consumer and Competition Commission (ACCC), most insurers were dragging their feet, which is why the scheme delivered virtually no premium relief in 2023.

The ACCC’s annual report on the federal government’s reinsurance pool released late last year showed premiums in North Queensland are still almost double those of the rest of Australia. The report said premiums would remain high for “some time.”

Mr Katter said that insurance brokers are telling him that a significant number of claims coming out of ex-cyclone Jasper are not covered by the pool, which will translate into much higher premiums for North Queensland and Far North Queensland policy-holders in the 2024 renewal cycle.

“The news is in, and it isn’t good. Our worst fears about the reinsurance pool are being realised.

“The insurance brokers that I have spoken to are receiving reports from insurers that the number of claims not covered by the reinsurance pool is double the rate of those that are.

“This is because most of the damage occurred more than 48 hours after the cyclone was declared over by the Bureau of Meteorology--a condition put into the legislation to limit the amount the reinsurance pool would be on the hook for.

“Jasper was supposed to be the first big test of the effectiveness of the reinsurance pool, but as far as Jasper is concerned, the federal government’s reinsurance pool might as well not exist.”

Instead, Mr Katter said insurers would be claiming against private reinsurance entities, who will themselves push up their prices, flowing into higher premiums paid by NQ and FNQ policy-holders.

Mr Katter said the State and Federal governments should move immediately to provide solutions to ease exorbitant insurance premiums faced by North Queenslanders.

The ACCC’s survey of insurance premiums nationwide reveals that the average premium paid by North Queenslanders is $2918, compared to the rest of nation of $1779.

“Townsville and Cairns householders pay around $600 per $100,000 insured, compared to Brisbane’s $300, so about twice as much,” he said.

“A levy on SEQ policy-holders makes sense because it would effectively do what the insurance companies are failing to do—spread risk around.

“We are calling for a $200 levy on every home and contents policy in SEQ—which could simply be administered as additional stamp duty on those policies. That amount would be distributed to NQ and FNQ households as a subsidy toward their insurance costs.

“There are more than four times as many policy holders in SEQ as there an in NQ and FNQ. The impact of the subsidy would be to reduce the premiums paid by people up here, conservatively, by $800 each household.

“A subsidy was the preferred method for equalising insurance costs in northern Australian proposed by CHOICE and other consumer advocates. I think it should still be on the table.

“All we want is to be treated like equals and to have the costs of our essential services, such as insurance, be on par with the rest of the state. That shouldn’t be a hard ask,” Mr Katter said.

In addition to direct subsidies to NQ policy-holders, the State and Federal governments should act to eliminate taxes on home, contents and strata insurance on all insurance premiums north of Mackay.

“The reinsurance pool when up and running will supposedly save North Queenslander homeowners anywhere between 10 and 30% on their premiums.

“There is no compulsion for insurers to pass on any savings to policy-holders, and I remain sceptical savings will be forthcoming.

“The State and Federal governments’ taxes, which includes Stamp Duty of 9% and GST of 10%, represents 16% of the premium paid by households,’ Mr Katter said.

Based on those numbers, Mr Katter said waiving the taxes on premiums would save the average homeowner in North Queensland $466.

“If eliminated, those tax savings alone could literally be taken to the bank.

“Currently, the ACT does not charge Stamp Duty on insurance premiums. The Queensland State government could immediately implement a similar measure and provide cost of living relief to people in the north of the State as well as make insurance coverage more affordable and accessible,” he said.

Combined with the subsidy, eliminating taxes would enable NQ and FNQ premiums to achieve parity with the rest of the state.

Mr Katter said rising insurance premiums were another example of essential services ballooning out of control and out of reach for North and Far North Queenslanders.

“The rate of uninsured properties in Queensland surged between 2011 and 2016 following the rapid increase in the cost of insurance, with the likelihood that the number of uninsured properties is significantly higher than the 20% reported by insurers in 2019.

“By neglecting the principle that insurance coverage is an essential service, what we have created is the potential for catastrophic, life-changing financial reversal for thousands of Queenslanders should they get caught out by a cyclone of cyclone-related flooding.

“The Premier and Prime Minister have said they are watching grocery prices like a hawk, but have been shockingly quiet about insurance costs.

“I would like to see similar language and a similar sense of urgency with respect to insurance, because insurance costs—if they keep going like this—are actually imperiling the average family’s ability to even live in North Queensland in any degree of comfort.

“The Premier and Treasurer have been doing a lot of talking about delivering cost-of-living relief and grandstanding about the $12 billion net operating budget surplus they posted in 2023-24, so to give reprieve would be just a drop in the ocean for the Government but would provide instant relief to those struggling at renewal time,” Mr Katter said.

Photo: Robbie Katter at the Strand in Townsville. Credit: Scott Radford-Chisolm