NSW Premier Bob Carr’s call for a levy on all existing insurance policies to finance the HIH claims shortfall was an opportunity QBE MD Frank O’Halloran couldn’t resist last Thursday. He told the QBE AGM the Government should finance the lot through the windfall profits it made off the insurance industry when it introduced the GST last July.

PM John Howard responded to Mr Carr’s plan by reminding him of his responsibilities to policyholders in affected statutory schemes and setting ASIC and APRA to work on what would be needed to establish a hardship fund. It’s understood the regulators have been instructed to develop commercial solutions to the problem.

Mr Howard also defended APRA last week, saying there was no suggestion APRA “was tardy in acting in response to information provided by the insurance company”.

Mr O’Halloran was ICA President throughout the GST implementation period and therefore was at the centre of frustrating negotiations with Treasury and the minister. He told his shareholders the Federal and state governments should bail out claimants by handing back some of the $500 million in windfall profits gained from the transition to GST.

But Federal Treasurer Peter Costello is having none of it. He said last week he will ”not be looking at putting taxpayers’ money into a company until all [other] avenues have been explored and exhausted”.

“At the end of the day, where governments step in for failing businesses they are not stepping in with their own money, they are stepping in with other taxpayers’ money.”

That’s not how the industry sees it, however. The normally reserved Mr O’Halloran admitted he is “fairly passionate” about the issue. “It is about time Costello handed some of that back to the industry, because it was windfall GST that’s sitting in his coffers and it wouldn’t hurt to hand some of that back to the policyholders in plight.”

Referring to QBE’s share of the abnormal GST charges picked up by the Government in 1999, he said: “I am probably more outspoken on this subject because it cost our shareholders $27.5 million and I don’t appreciate that.”