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Insurance Business | 29 Sep 2014, 08:39 AM Agree 0
A broking body says the Productivity Commission's report on natural disaster funding, which calls for more finance to mitigate risks, is in line with its views.
  • The Oracle | 29 Sep 2014, 10:04 AM Agree 0
    I have no dispute with technically correct pricing to reflect risk. The numbers do tell the story - Risk verses premium. But the other story is the severe financial impact on house insurance premiums anywhere north of the Tropic of Capricorn but particularly coastal North Queensland. The majority of households have had to find extra cash to fund 4 figure premium increases - not for flood insurance but cyclone. I see two problems. Has Australia with such a small population basis got the right pricing model to sectionalise risk exposures? I would argue that the model is flawed - because the premium cost becomes unsustainable. Which leads to the second problem. How will the current pricing model survive the next catastrophic event? Frankly I think the RACQ submission touching on Tax Relief is a good stop-gap. I would go further and suggest the gap in difference say between Townsville and Brisbane domestic building insurance should be fully tax deductible. Either that or the industry adopts a whole-of-Australia rating model until risk minimisation strategies and population growth catch up.
  • Monty Sheridan | 29 Sep 2014, 12:18 PM Agree 0
    @ The Oracle. Couldn't agree more. Ask the people in Tully / Cardwell how to 'mitigate against risk' for cyclone. As touches on in the above article above risk factoring is now so precise its a house level... Isn't this moving away from the original principle of insurance in itself? Not a fan of tax deduction, however see the need for a disaster pool/levy, similar to EQC in NZ.
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