THE cost disparity between insurance premiums in northern Australia comparative to the rest of the nation has caused great debate in recent years due to the haziness of the reasoning that insurance companies provide for the high northern cost.
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Australian Government Actuary (AGA) reports show for a range of insurers, premium rates on home and contents insurance in northern Queensland rose by between 10 and 25 per cent per year from 2009-10 to 2012-13.
As a result, the average premium rate in northern Queensland in 2012-13 was about 1.5 times the average in Brisbane and 2.3 times the average across Sydney and Melbourne.
For strata insurance, the AGA’s reports show that the increase in premiums in northern Queensland ranged from around 15 per cent to 65 per cent over the period 2009-10 to 2012-13 (see Figure 2). On average, strata premium rates in northern Queensland were around five times those in the east-coast cities of Brisbane, Sydney, Melbourne and Adelaide.
Member for Hinchinbrook Andrew Cripps said the sharp increases in insurance premiums in northern Queensland are causing hardship for residents of these regions.
“The unrealistic increases in premiums are resulting in people failing to insure their assets, or underinsuring them, which leaves them exposed and increases the risk of them suffering serious losses in the event of a natural disaster,” Mr Cripps said.
“Strata title properties and rural property insurance seem to have been worst hit in general, but all policy holders have been impacted.”
He said the high cost of insurance is a barrier to economic growth, new development opportunities and business investing in northern Queensland.
“High insurance premiums are simply an additional fixed overhead cost for businesses in these regions, which prevents existing businesses from expanding and new businesses from starting up,” he said. “There is no doubt that the significant increases in premiums are costing us jobs.”
Mr Cripps said he has never had much faith in the systems used by insurance companies to assess the real risk on an individual property basis to calculate premiums.
He said north Queenslnaders are recovering costs from cyclone and flood events that have occurred over the last decade.