North Queensland residents are anxious about the cyclone season and how it might impact the ever-rising insurance premiums in the region. However, the Australian Competition and Consumer Commission (ACCC) might have a solution.
Margaret Shaw, a Whitsunday resident and former treasurer of the body corporate of a complex of 25 apartments, said she witnessed firsthand the impact of sky-high insurance premiums on homeowners and residents across the region.
“In 2011 after Cyclone Yasi, which was way north of the Whitsundays, strata insurance went from $25,000 for 25 apartments to $81,000. The treasurer at the time couldn't cope, so I took over,” Shaw said, as reported by ABC.
Strata insurance is mandatory in Queensland and covers the common areas of properties, such as apartment buildings and unit complexes.
Whitsunday Regional Council Mayor Andrew Willcox added that he heard about residents and businesses unable to afford insurance after Cyclone Debbie as premiums had “gone through the roof.”
“If we do have a major event and you aren't insured, I don't know how the businesses will survive or fix their businesses up,” he continued.
The ACCC's Northern Australia Insurance Inquiry revealed that home, contents, and strata insurance premiums in the region had increased faster than other areas in Australia due to the higher risk of extreme weather.
The report made 38 recommendations to address the issue in the short-, medium-, and long-term, including providing immediate relief to consumers facing acute affordability pressures and using subsidies.
“Direct subsidies can be used in a highly targeted way to relieve some of the acute financial pressures faced by households in specific areas at a lower cost and more effectively than other measures,” said ACCC Deputy Chair Delia Rickard. “We do not believe that government insurers and reinsurance pools can lower premiums without the government subsidising the insurer in some way.
“Our analysis has shown that, with the right actions, northern Australian insurance markets could work much better for consumers. We believe our wide-ranging recommendations would address many of the problems we have identified.”