Queensland MP Warren Entsch’s claims that insurers are “gouging” consumers in the north are groundless, the Insurance Council of Australia (ICA) says.

ICA has published a list of the most flood-prone areas in the country as part of a renewed push for increased public spending on mitigation works.

But, as previously reported by insuranceNEWS.com.au, Mr Entsch attacked the move as “opportunistic” and “a means to justify their gouging”.

ICA spokesman Campbell Fuller says in fact, contrary to Mr Entsch’s assertions, the catastrophe-prone north remains an unprofitable market for insurers, citing findings from past inquiries and the Australian Competition and Consumer Commission’s (ACCC) ongoing probe.

He says an Australian Government Actuary report found insurers were paying $1.40 in claims for every $1 they received in premiums.

“Mr Entsch is happy to accuse the insurance industry of gouging, despite the facts,” Mr Fuller told insuranceNEWS.com.au.

“In its interim report late last year, the ACCC reported insurers were still losing money in northern Australia.

“North Queenslanders are also five times more likely to lodge a claim than other Australians, and those claims are much more expensive to resolve. Mr Entsch doesn’t like the answers but he should not ignore the facts.”

ICA stands by the report it released last week as part of a concerted push for more political action to address the longstanding problem before a federal election expected in May.

The report featured a top-20 list of federal seats most prone to flood, and Mr Entsch’s Leichhardt seat in north Queensland ranked eighth.

The MP claims past mitigation measures have not benefitted consumers in the form of lower premiums.

But ICA disagrees. Mr Fuller says property owners in Roma had premiums reduced by an average of 35% when the Queensland town completed the first stage of a flood mitigation project.

“Stage 2 is due for completion soon, and further premium falls will be experienced by many property owners,” Mr Fuller said.

“Insurers price the risk of floods, cyclones and other events into premiums.They have proven they will lower premiums when the risk is reduced through investments in mitigation.

“Well-designed and maintained mitigation protects communities for generations. Mitigation can also help insurers operate sustainably in high-risk regions, rather than being forced to consider withdrawing from the market because it is unviable and unsustainable.”

ICA says mitigation is still the answer to the north’s affordability woes.

“Mitigation, alongside programs to improve the resilience of north Queensland properties from the impact of floods, storms and cyclones, would help strengthen the economic future of Cairns, Townsville and other communities in the north.

“Improvements to building codes, town planning and state taxation should also be part of the long-term solution.”