The broking industry has welcomed the Federal Budget’s multimillion dollar committment to boosting insurance affordability in North Queensland but questioned the funding priorities.
Last night the Federal Government announced $12.5 million would be spent assisting strata body corporates in North Queensland undertake building assessments for risk management, as well as unspecified funding for an insurance comparison website.
NIBA CEO Dallas Booth says the funding for building assessments is a welcome and important move.
“It’s appropriate for insurers and underwriters to be able to rate properties on their actual risks, not the assumed risk, so anything that can enable that to happen more effectively could be a very good outcome,” he says.
“However, we have major reservations about an insurance comparison website and will be making a submission to the Federal Government about this before the 2 June deadline.
“When it comes to difficult insurance-related issues consumers don’t need a website – they need advice from a competent, qualified professional. We feel very strongly about this.”
Last week, Finance Minister Mathias Cormann released a discussion paper exploring options to increase competition and assist consumers seeking home, home and contents and strata premiums, in response to rises of up to 200% in the past five years.
The paper identifies three possible options for doing so but devotes the bulk of its discussion to the development of the mootedcomparison website.
“When they are used to compare on price, aggregators are considered to increase competition and put downward pressure on prices,” the paper states.
“They have been particularly successful in the United Kingdom and have been cited as a factor in putting downward pressure on premiums in the motor vehicle insurance market.”
However, the report also acknowledges that UK authorities are reviewing the use of comparison websites, citing concerns that consumers may not get the best deal if they focus on price instead of the level of cover.
The discussion paper also briefly discusses enhancing the resilience of strata buildings, noting “there may be some scope to about modest reductions in price where resilience measures are put in place.”
Last month, CGU began engineering inspections of the hundreds of strata buildings it and SUU insure in the region, with an aim of reducing premiums where possible.
So far, 10 complexes have been assessed and of the four assessments analysed. Each block has received premium reductions of between 12 and 15%.
The third option for increasing competition cited by the paper involves relaxing restrictions on unauthorised foreign insurers entering the market.
NIBA will be consulting members ahead of making its submission to Treasury next month.
To view the paper, click here.