Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

My question is to the Treasurer. Acknowledging Duncan Fysh and Shannon Siebel, insurance on an Innisfail house in 2007 was $792 and is now $3,700; and in Julia Creek it was $2,300 and is now $22,000. Julia Creek is not noted for floods, cyclones or tidal surges. Since pre-Cyclone Tracy code houses are gone, Treasurer, surely the government must red-line insurance areas by regulation, or extend a modified health insurance approach to cover dwellings, or provide partial government underwriting to deliver real future actuarial costing. (Time expired)

Joe Hockey (North Sydney, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for Kennedy for his question. I do declare an interest: I do pay insurance up there and the insurance has gone through the roof, particularly since Cyclone Larry.

The insurance premiums—which are being compounded by the insurance taxes, GST and so on, on the top of insurance—have risen enormously over the last few years, particularly in relation to body corporates. This is something that the member for Leichhardt has been incredibly aggressive about. He has belted down the door to my office. Perhaps I will temper that by saying he has been assertive rather than aggressive. He has been ringing the bell on this for some period of time.

This is something that the Assistant Treasurer has been working through with the insurance industry. There are some challenges, particularly in relation to reinsurance. Ultimately, the costs of reinsurance end up being directly linked to events that occur in a region. The fact that insurance premiums have risen so dramatically, particularly in North Queensland has unquestionably been linked to increased reinsurance costs. Also, obviously, one of the reasons reinsurance costs have increased is because of the very significant events that have occurred up there, including recent cyclones.

The net impact of that is that people either underinsure or do not insure. Australia, unfortunately, has a fairly high level of under-insurance.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

I rise on a point of order. The question was about the actuarial. All the old houses are gone. There is no justification, now, Mr Treasurer, for an increase. All the old houses are gone.

Joe Hockey (North Sydney, Liberal Party, Treasurer) Share this | Link to this | Hansard source

That is not right, because the insurance premium increases are applied across the board—effectively, right across North Queensland. So it is not isolated to a particular class. For example, body corporate insurance has increased so significantly in the last six years, but other classes of insurance have also increased due to the increased cost of reinsurance but also because of market concentration up there. Market concentration is an issue particularly in relation to body corporate insurance.

Having said that, I want to be able to report to you, in the next few weeks, exactly what has come out of the discussions between the Assistant Treasurer and the insurance companies in relation to this matter, because it is something that has been raised repeatedly by my colleague the member for Leichhardt and the member who was recently ejected from the House, the member for Herbert. The fact is that this affects the whole of Queensland and it is a serious issue.