PM’s $10b pledge: Insurance scheme for ‘crippled’ north Qld
North Queenslanders smashed with the double blow of cyclones and insurers refusing to cover them or charging sky-high premiums will finally get some relief under a long-awaited scheme to be revealed today.
Prime Minister Scott Morrison will be in Queensland on Tuesday to announce a $10 billion guarantee aimed at dropping unaffordable insurance bills and making sure people can actually access a policy.
Insurance skyrocketed in north Queensland after a series of devastating cyclones, with the average premium for a strata property in north Queensland hitting $6800 a year, compared to the national average of $3000.
The scheme will be a $10 billion reinsurance pool, or guarantee for insurers, and will apply to about 500,000 residential, strata and business policies from Rockhampton north and within 100km either side of the coastline.
It will start from July 2022 with the $10 billion guarantee effectively working as "insurance for the insurance", taking away risk for the insurers and encouraging them to enter back into the market or offer policies at lower prices.
There will be a separate scheme specifically for strata holders, with a $40 million fund set up to contribute towards cyclone-proofing buildings to provide further incentive for insurers to drop prices.
Government backbenchers like Phil Thompson, George Christensen, Warren Entsch and Susan McDonald frequently raised the red-hot issue in Coalition party room meetings and directly with the Prime Minister.
It is estimated it could lower prices by $1.5 billion for properties over 10 years, though variables on individual policies mean there is no current estimate for the price reduction for individuals.
Mr Morrison said the plan will provide access to more affordable insurance to Australians in cyclone-prone areas.
"Homeowners and businesses have been faced with crippling insurance costs, and in some cases, can't get insurance at all. It's not OK and we're going to change that," he said.
Herbert MP Phil Thompson said insurance was as essential as water and electricity and the reinsurance pool would give access back to north Queenslanders.
"The people of north Queensland deserve to be able to have insurance like everywhere else in the country," he said.
"It's a win for the community that have been suffering through high insurance prices, because it's their voice that got the result."
Details of both schemes are yet to be finalised. It is being investigated whether consumer watchdog, the Australian Competition and Consumer Commission, can be used to monitor prices to ensure savings are passed on.
The second scheme, known as the North Queensland Strata Title Resilience Pilot program, will be a $40 million fund used to approve practical works aimed at reducing damage done by cyclones or cyclone-proofing their building, like retaining walls.
It will operate on a co-contribution basis, with the strata body to make an application for funding for a risk-mitigation project which will be assessed by the government.
The Federal Government will also seek contribution from the Queensland Government for this scheme, with an agreement aimed to be reached by the end of this year for the strata scheme to start from January 1.
Originally published as PM's $10b pledge: Insurance scheme for 'crippled' north Qld