Insurance company’s plan to solve CQ’s affordability crisis
A Queensland insurance company has called on the Federal Government to back insurers prepared to enter the household and residential strata insurance markets across Central Queensland.
Sure Insurance claims to have a number of initiatives to encourage greater competition and drive down premium prices.
This includes a scheme that equips insurers with a tax-effective catastrophe capability titled the Catastrophe Event Provision.
Sure Insurance managing director Bradley Heath said it was time the Federal Government recognised insurers with “skin in the game” and encouraged and backed greater market participation and price competition.
“We all know in a good year, insurers will make a profit and in a bad year, they will not,” Mr Heath said.
“This is when the Catastrophe Event Provision comes into effect and is designed to help prevent or reduce insurance premium increase shocks.
“If market entrants and existing insurers were allowed to put away some of the profits up to a legislated limit, on a tax-effective basis, then in the bad years they can use that retained profit to enable a smoothing of results which should stop or reduce large-scale premium increases when losses do occur.”
He said the Catastrophe Event Provision proposal wasn’t a “free kick” for insurers because long term it wouldn’t cost Australian taxpayers anything.
“It’s very similar to other industry arrangements such as the Farm Management Deposit Scheme that has been around for many years and also other such insurance schemes around the world,” he said.
He said it was widely known some insurers refused to cover areas of North and Far North Queensland.
He said some were major international insurance companies that were relying on a government funded reinsurance pool before re-entering those markets, which he thought wasn’t fair.
He said, from a standing start two years ago, Sure Insurance had proven market competition drove down prices, and questioned why the government was looking to subsidise multinational companies, instead of creating incentives to boost competition.
“After almost two years of market operations our specialist pricing expertise has delivered average annual household insurance premium savings of over $1400 per customer across Central, North and Far North Queensland,” he said.
“While some are calling for the government and taxpayers to foot the bill, Sure Insurance’s entry into the regional Queensland market is a clear example of increased market competition working to effectively tackle the affordability crisis, while at the same time delivering a solution to the region’s no-insurance issue.
“We are convinced additional insurance market entrants will further reduce the cost of premiums and assist regional householders across vulnerable communities to access essential household and residential strata insurance cover.”
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