Insurers have come out swinging against a Federal Government taskforce considering a cyclone insurance mutual in northern Australia, urging greater mitigation funding instead.
The Northern Australia Insurance Premiums Taskforce earlier this week released its interim report, calling for comment on proposals to run a state-backed cyclone mutual insurer, or a reinsurance pool, as well as how to improve disaster mitigation efforts.
Insurance Council of Australia CEO Rob Whelan says: “Government intervention through a taxpayer-funded mutual or a reinsurance pool would be an incredibly expensive and unnecessary interference in a functioning market.
“In all likelihood intervention would not achieve the objectives the Abbott Government is seeking.
“Government intervention overseas has in almost all instances only resulted in multi-billion-dollar ongoing liability for taxpayers and government deficits, as well as perpetuating the problem by encouraging inappropriate development in high-risk areas.”
However, the report has also been praised for its approach to mitigation, acknowledging that it “should be an important component of any effort to reduce insurance premiums”.
It has asked for comment about specific methods to improve resilience to cyclone damage, including mitigation assessments for houses, funding or facilitating mitigation action, supporting mitigation research and promoting steps to reduce small claims.
IAG Personal Insurance Chief Executive Andy Cornish welcomed a focus on mitigation, calling for targeted mitigation efforts.
He says recent research had shown targeted resilience investments of $250 million a year could save $12.2 billion by 2050, more than halving natural disaster costs.
NIBA CEO Dallas Booth says NIBA will closely consult with members, particularly those with clients in northern Australia, ahead of preparing a response to the taskforce.
“Part of that process will be to stage member meetings in Far North Queensland so we can accurately gauge the opinions of those who are very close to the issue,” he says.
The dates and locations have yet to be confirmed but will occur after the NIBA Convention on 6–8 September.
View the full interim report here.