Insurers operating in North Queensland have been cleared of price-gouging again, following another report by the Australian Government Actuary.
A new report by the Actuary, Peter Martin, has found the average 80% increase in home and contents premiums in North Queensland since 2005 has been driven primarily by cyclone risk.
The findings mirror those of a similar report into strata insurance in the region, released six months ago.
“NQ experienced a number of weather events during the period of the investigation which led to significant insurance losses,” Martin wrote.
“This period of poor claims experience coincided with developments in catastrophe modelling, including cyclone modelling. Catastrophe reinsurance costs also increased.”
Insurance Council of Australia CEO Rob Whelan welcomed the report.
“Over a long period, insurers have paid out $1.40 for every $1 they receive in premiums in North Queensland,” he says.
“They are losing money in an unsustainable fashion due to the fact communities in the region are frequently hit by cyclones.
“However, despite these losses, insurers have remained in the market and have helped rebuild North Queensland communities following some of Australia’s largest natural disasters of recent years.”
The Federal Government is attempting to address concerns over insurance affordability in North Queensland by launching an insurance comparison website and encouraging greater use of unauthorised foreign insurers.
However, the Federal Government’s Productivity Commission has warned that vastly greater investment in risk mitigation is needed to address premium concerns.
“Actions to increase competition in a market where the competitors all consistently lose money will be unlikely to have as strong an effect as solving the underlying problem – many properties in North Queensland experience regular extensive and expensive damage due to the impact of large cyclones,” Whelan says.