Insurance industry gets state budget boosts

Insurance taxes

State budget season has brought good news for the insurance industry, with some state and territory treasurers leading the way on risk reform.

NIBA CEO Dallas Booth has congratulated the Australian Capital Territory Government for its continued work to wind back stamp duty on general insurance and its commitment to fully abolish such taxes by 1 July, 2016.

The latest ACT budget reduces stamp duty on general insurance from 6% to 4%, and on life insurance from 3% to 2%.

“Insurance taxes directly affect the affordability of insurance in Australia,” Booth says. “As such, they contribute directly to the under‐insurance and non‐insurance concerns across the community.

“This is directly contrary to good social policy. Insurance is the main source of funds for restoration and recovery from natural and other disasters, and lack of comprehensive insurance cover results in real ongoing detriment to individuals, families and communities across Australia.

“We hope other states and territories take note of this significant example of tax reform.”

Insurance Council of Australia CEO Rob Whelan echoed Booth’s sentiments, singling out Tasmania and Queensland for their recent increases in insurance duties.

“The insurance industry believes all taxes and levies on insurance products should be removed, and hope the Federal Government’s Financial System Inquiry will provide appropriate frameworks for this to take place.”

Whelan also welcomed the Queensland Government’s $51 million commitment to disaster mitigation and resilience projects.

“Investing in resilience and permanent mitigation helps protect at-risk communities for many generations, preventing or reducing emotional, physical and financial distress and devastation,” he says.

“A fortunate flow-on effect from the completion of mitigation projects is, in many cases, a significant reduction in insurance premiums for those properties at the greatest risk.

“For instance, in the past year, property owners in Charleville have benefitted from premium relief where mitigation works have been completed.”

However, Whelan also pointed out that the current Queensland stamp duty on insurance of 9% was a disincentive to be properly insured.