Territorians to benefit from reinsurance pool for cyclones and flood damage
Territorians will be offered more affordable and accessible insurance for their homes and businesses after the establishment of a reinsurance pool by the Federal Government.
The reinsurance pool will cover cyclones and related flood damage in Northern Australia from July 2022 and is backed by a $10 billion government guarantee.
It aims to reduce insurance premiums across Northern Australia by more than $1.5 billion for households and small businesses over 10 years.
Prime Minister Scott Morrison says the reinsurance pool will reduce the risk to get more commercial insurance providers into the Northern Australia market, bringing back competition.
“The number of providers has dwindled, particularly as each disaster hit and the few of them that were around, the premiums just go higher and higher, forcing people either into retirement or out of business,” Mr Morrison says.
“I’ve listened to our local MPs and senators, I’ve sat down with residents and discussed the issue,” he says.
“Homeowners and businesses have been faced with crippling insurance costs, and in some cases, can’t get insurance at all. It’s not ok, and we’re going to change that.”
According to a report by the Australian Competition and Consumer Commission 20 per cent of properties in Northern Australia are uninsured, which is almost double the national average.
Assistant Treasurer Michael Sukkar says he has received positive feedback from the insurance industry.
“I've already had two large national insurers say to me that they will be shortly announcing that they are re-entering the Northern Australian market now that they will be able to access reinsurance through the Australian government,” Mr Sukkar says.
A taskforce led by the Federal Treasury Department will develop the final design of the reinsurance pool in close consultation with the industry.
The government has also committed $40 million to specifically reduce insurance costs for strata properties, which face some of the worst insurance pressures in Northern Australia.
Mr Sukkar says the three year pilot will help owners protect their strata properties against cyclone risk.
“Whether it's retrofitting roofs, whether it's improving cladding, whether it's improving drainage,” he says.
“It will work hand-in-hand with the reinsurance pool to bring down premiums across the board, but to even enhance those premium reductions in those strata properties.”
More than 500,000 residential, strata and small business property insurance policies are expected to be eligible under the initiative.
(Photo: Main - Generic Cyclone Marcus image by Flickerd via (CC BY S-A 4.0), Above - ScoMo Facebook)