House debates

Thursday, 4 February 2021



4:35 pm

Photo of George ChristensenGeorge Christensen (Dawson, National Party) Share this | | Hansard source

There's a perfect storm of discontent brewing in North Queensland as councils, economic development groups, community leaders, small business owners, those with strata units and householders cry out for a real solution to the insurance crisis that they face. The storm has been brewing for many years, but, if you'll pardon the analogy, it has now hit the category 5 cyclone level as some businesses face insurance premium hikes of almost 200 per cent in one year and other businesses cannot get insurance at all.

About three weeks ago I met with local government, business and tourism industry representatives from Cairns right down the coast to Rockhampton to hear their concerns and to advocate for a united call to action to secure a solution for what is a clear case of market failure. That solution is the establishment of a reinsurance pool. I've highlighted horror insurance examples here before, but here are a few of the latest.

A 72-year-old pensioner living in a modest three-bedroom house in Townsville has just received his insurance renewal and it has jumped by 29 per cent. His yearly premium is now $2,200, an increase of $500 from his last year's premium of $1,700. His house did not flood during the Townsville monsoon event of January 2019 and he has not made a claim in the last 12 months, yet this pensioner is expected to find another $500 a year to continue insuring his house.

A Whitsundays couple with a modest three-bedroom home in Jubilee Pocket have seen their insurance increase by 37 per cent in the past two years. They bought their home in 2000 and have never made a claim, not even during Cyclone Debbie, and yet they now face a premium of $3,554 a year.

The figures get even more frightening when we look at resorts and units. A small holiday resort with 28 rooms in a Mackay beach suburb have seen their premiums jump by 191 per cent in 12 months, from $68,000 last year to $198,000 this year. That small business owner is faced with a bill for another $133,000 a year. When it comes to strata, the premiums are off the charts. Operators in Airlie Beach with 25 apartments spread over seven buildings have seen their premiums rise by 420 per cent over the past 14 years. That's an increase of $4,000 per unit. The insurance bill has gone from $20,000 a year to $104,000 a year.

Then we have the many examples of businesses, clubs and other strata apartments that simply cannot get insurance at all. I've talked to the operators of commercial hotels and community clubs and the owners of apartments who can't get a provider to insure them because of their location. It's discrimination by postcode. This is a real problem for those with a mortgage because it is a requirement of their bank that they have adequate insurance.

Body corporates are also facing difficulties because Queensland law requires a body corporate to have adequate insurance to trade. The Queensland government has had to take the step of inserting a clause into legislation so that body corporates can apply for an exemption to the law. The Palaszczuk Labor government could also provide some immediate relief by abolishing or reducing stamp duty. This is, in fact, one of the top recommendations in the ACCC northern Australia insurance inquiry report.

As I met with mayors, CEOs, councils, tourism bodies and business development groups throughout the north last month I found huge support for a federal government backed reinsurance pool. Many of these organisations from Rockhampton to Cairns have relayed that information to the government in their prebudget submissions. The Townsville Chamber of Commerce has pointed out that insurance is an essential service and has called on the government to expand the Australian Reinsurance Pool Corporation remit to include northern Australia and the natural events of cyclones and floods. Another submission, from the Greater Whitsunday Alliance economic development group, points out that the situation is unsustainable and adds to the cost-of-living burden of residents in the region, potentially deterring new business and industry investment.

I also welcome the Insurance inquiry report of December 2020, from the Australian Small Business and Family Enterprise Ombudsman. Ombudsman Kate Carnell rightly states:

There is market failure that will have extreme consequences for the Australian economy if left unaddressed.

Her report recommends the expansion of the Australian Reinsurance Pool Corporation to provide reinsurance for all natural disasters for commercial property insurance.

We even have one insurance company calling for a reinsurance pool. In their submission to the ACCC's Northern Australia Insurance Inquiry, Allianz Australia predicted a saving of more than 50 per cent on premiums for a standard North Queensland home if a reinsurance pool were to be established.

While there are a number of measures that will help with addressing the high cost of insurance in the north, there is one clear solution which must be instigated. The united call from the north is: we need a reinsurance pool.