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The federal government has stepped in to give a leg-up to home owners, businesses and strata properties who are paying an arm and a leg for appropriate cyclone insurance in Northern Australia.
A joint statement from Prime Minister Scott Morrison, Treasurer Josh Frydenberg, Minister for Emergency Management David Littleproud and Minister for Northern Australia Keith Pitt revealed the reinsurance pool, which will cover cyclone and related flood damage in Northern Australia from 1 July 2022.
The new initiative, which looks to support households, strata and small businesses, is backed by a $10 billion government guarantee, which will aid in reducing insurance premiums across the region by more than $1.5 billion.
The government expects that more than 500,000 residential, strata and small business property insurance policy holders in Northern Australia will be eligible for coverage under the reinsurance pool.
Prime Minister Scott Morrison said the plan shows government support for “the future of Northern Australia”.
“We need to take further action to boost the resilience for Australians to live and work in Northern Australia,” Mr Morrison continued.
“I’ve listened to our local MPs and senators, I’ve sat down with residents and discussed the issue. Home owners 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.”
A Treasury-led taskforce is responsible for developing the final design of the reinsurance pool, which Mr Frydenberg said is being done in close consultation with the industry, with a number of details still to be finalised.
“More affordable insurance means peace of mind for hundreds of thousands of Australians across Northern Australia, knowing that their economic livelihoods are protected,” the Treasurer said.
Minister Littleproud also flagged the scheme’s aim of “easier and cheaper” insurance for the tropical north, while iterating that federal government is not the insurer of last resort.
“It will put more money back into the pockets of those in the cyclone and flood-prone areas of far North Queensland and the savings will build in their bank accounts for years to come,” the minister said.
Alongside the reinsurance pool, the government also revealed a plan to specifically reduce insurance costs for strata properties, through the provision of $40 million in funding for a North Queensland Strata Title Resilience Pilot Program, which will kick off in 2022.
Strata properties face some of the worst insurance affordability pressures in Northern Australia, according to housing minister Michael Sukkar.
He cited ACCC data that showed the average strata premium was $6,800 in North Queensland, compared with the Australian average of only $3,300.
“Strata residents have few options other than to pay this because strata properties are required to hold insurance under Queensland legislation,” Mr Sukkar said.
The new three-year strata pilot will provide for cyclone risk mitigation works to improve insurance affordability and access for strata title properties in North Queensland.
He considered the funding for the pilot program as representing “the most significant action taken by the Commonwealth to improve insurance affordability and accessibility in Northern Australia”.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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