Submission to the Northern Australia Insurance Premiums Taskforce Submission

Sep 17, 2015 - 2:00pm

The Climate Institute welcomes this opportunity to comment on the task force’s frank discussion of this complex problem and, in particular, its underlining of the importance of risk-based insurance premiums in signalling that can support risk avoidance, minimisation and resilience.

Our 2014 report, Buyer Beware, found that high levels of variability exist in home insurance premiums in various parts of Australia – up to 1100 per cent. Some locations with the biggest variance were not in northern Australia, but South East Queensland, regional NSW and Tasmania. It also identified that extremely high insurance premiums can be detected in some of those areas far south of the area under consideration here. This Task Force is charged with addressing a perplexing policy issue; one which will very likely exacerbated and replicated in future.

In this submission we largely refrain from commenting in detail on financial mechanisms in either the mutual or the reinsurance pool, except where they intersect with a need to promote an evidence-based signal about both historical and future risks of natural disaster to individuals, businesses and governments. We also do not specifically address questions of social equity, but we note that there is considerable research showing that disadvantaged people and those on low incomes are most vulnerable to extreme weather and climate change, and we support policies that address this vulnerability in a sustainable and long-term manner.

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