The planned sell-off of the Territory Insurance Office (TIO) in the Northern Territory could have a massive impact on homeowners according to a Darwin broker.
The planned sell-off of TIO was announced at the beginning of October with chief minister of the Northern Territory Adam Giles calling for a “mature conversation” about the future of TIO.
“TIO is the last insurance company in government ownership anywhere in the country.
“When it was formed in 1979, most banks and insurers did not operate in the Territory. Today, there are 12 insurers competing in the Territory market, all of which offer cyclone insurance and all but one of which offer flood insurance.
“Cabinet is seeking to ascertain whether the Government
should be in the business of owning a financial services business or whether it would be more beneficial to unlock the value of taxpayers’ investment in TIO to fund economy-growing infrastructure that is critical to the development of the Northern Territory.”
TIO uses an equalisation policy with means home insurance is not affected by location which leaves premiums in higher flood risk areas much lower than when priced with an independent insurer.
An insurance broker based in the Northern Territory, Brett Hagan, told 105.7 ABC Darwin
that in flood risk areas of the Northern Territory, premiums with TIO are around $1200 while a competitor quoted a price of around $4400.
"[With TIO] Everyone pays exactly the same premium in Katherine. Everyone pays exactly the same premium anywhere in Darwin."
"With commercial policies, TIO will load for extra risk of flood and storm surge," Hagan continued.
"But at least you'll still get a quote from them. Other insurers choose not to quote or very much sub-limit how much cover they get you for flood or storm surge.
"That's borne out in northern Queensland where some businesses just can't get insurance."
This is not the first time TIO has been at the door of sale with Rothschild Bank having an offer rejected by the TIO board in 2006 but Giles stressed that the future of TIO is still yet to be decided.
“No final decision has been reached regarding TIO but any option that was considered in the future would have to ensure Territorians would still be able to access flood and cyclone insurance and that we protect the TIO brand.”