A taskforce is looking into various options such as a reinsurance pool backed by the government.
The Abbott government is making insurance news as it considers making financial support available to reduce the premiums that are being paid in certain regions of Australia that are particularly prone to cyclone damage.
There have been a number of different potential options presented by the government for this purpose.
Among those making the top insurance news include a government-backed reinsurance pool, or a form of coverage specific to cyclones that is provided by a mutual insurer. This type of program is more than likely to involve the Australian Reinsurance Pool Corporation (ARPC), which the Howard government established back in 2003. It was created for the purpose of boosting protection against terrorism insurance claims.
This insurance news could be very welcome by people in cyclone prone parts of the country.
The current version of the program sees insurance companies paying premiums into the ARPC in order to make sure that the commercial property damage risk has reinsurance in the case of terrorism. The authority then provides a reimbursement for losses that are greater than a certain limit.
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Josh Frydenberg, the assistant treasurer, explained that the government would be requesting that a newly formed taskforce look into the various ways of addressing the size of the insurance premiums that are being paid in the northern areas of the country where the risk of cyclones is higher. He stated that “Insurance costs in north Queensland are five times higher than in Sydney and Melbourne for strata insurance, and two-and-a-half times higher for home insurance.” He also added that the primary reason that the premiums are as high as they are in those areas is the increased cyclone risk that they face and that “Similar issues exist in other cyclone-prone regions of northern Australia.”
A senior government official is heading the task force in this insurance news. That group will be working with the insurance industry as a whole as well as with other stakeholders in order to develop a final report that will be presented in half a year.