In yet another review of insurance in Northern Australia, the consumer watchdog, at the behest of the Federal Treasurer, is about to launch an inquiry into the supply of home, contents and strata insurance in the region.
“This inquiry will support transparency and the efficient operation of the residential insurance market in northern Australia, including through the monitoring of the industry for a period of three years,” said Treasurer Scott Morrison in his request.
Northern Australia will include the Northern Territory, parts of Queensland and Western Australia north of the Tropic of Capricorn and some areas south of it including Carnarvon WA and Gladstone, Qld.
The matters the Australian Competition and Consumer Commission (ACCC) will consider include:
- the pricing and availability of insurance in the region
- the key cost components of insurance pricing there and how they have changed over time
- insurance terms and conditions
- the competitiveness of the market
- barriers to entry, expansion/exit
- regulatory issues that might not support development of competitive markets for insurance
- profitability of insurers.
The inquiry will start on 1 July and interim reports are due 30 November 2018 and 30 November 2019, with a final report due 30 November 2020.
The ACCC has been provided with $7.9 million over four years in the 2017/2018 Federal Budget to conduct this inquiry.
The issue of affordability of insurance up north is not new, with a Northern Australia Insurance Premiums Taskforce set up in 2015 to delve into the issue. Its final report was published in March 2016 recommending mitigation as a key approach to reducing premiums in the region.
The government has not responded formally to the Taskforce report but has provided $26.1 million in the 2017/2018 Budget to be spent on disaster mitigation. This is well under the minimum $200 million a year recommended by the Productivity Commission’s inquiry into Natural Disaster Funding Arrangements, according to the Insurance Council of Australia.
NIBA will monitor the inquiry’s progress and keep members updated on any issues that arise requiring brokers’ input.
The ACCC website has more information on the inquiry.