The Northern Australia Insurance Premiums Taskforce’s conclusion that mitigation, not government intervention, is the key to reducing prices in the cyclone-prone region has found favour with the insurance industry – but has left campaigning MP Warren Entsch empty-handed.

Mr Entsch, whose Leichhardt electorate covers the northern tip of Queensland, lobbied the former Abbott government to conduct the review into potential solutions to high premiums.

He favours the creation of a reinsurance pool or a mutual scheme.

The report places “too much focus on mitigation”, Mr Entsch says. The long-time critic of the insurance industry says mitigation is “the easy way out for the insurance companies”.

The Insurance Council of Australia (ICA) – Mr Entsch’s bête noire – comes in for direct criticism.

“I do suspect [ICA] has used some rubbery figures in its submission,” he said.

The taskforce investigated creating a government-run cyclone reinsurance pool or mutual cyclone insurer, but is cool on both.

ICA CEO Rob Whelan says the report reinforces the industry’s argument that a mutual or pool would not address the cause of high premiums. It agrees with the taskforce that mitigation is the only sustainable way to address home insurance prices in cyclone-prone areas.

“Improving older properties to make them stronger; strengthening building codes; and better land-use planning to ensure developments in cyclone-exposed areas are appropriate,” Mr Whelan said.

“Insurers have paid out more than $3.5 billion to north Queensland policyholders since 2006 due to cyclone damage alone. That is the fundamental reason insurance premiums have risen.”

ICA notes a greater Government focus on mitigation spending has also been backed by the Productivity Commission report into natural disaster funding and the Australian Business Roundtable for Disaster Resilience & Safer Communities.

Suncorp Insurance CEO Anthony Day has welcomed the taskforce’s final report and its focus on mitigation. 

He says the insurer is already acting. It rewards customers in northern Australia with premium reductions of up to 20% for strengthening their homes against cyclones. See other story

“Suncorp recognises we need to send stronger signals by rewarding individuals making their roofs more cyclone resilient,” Mr Day said. “It’s now time for governments to invest in mitigation… we have spent too much on rebuilding communities rather than investing in their protection.”

IAG CEO Australian Consumer Division Anthony Justice also welcomes the report’s focus on mitigation, saying there is a need to invest in a co-ordinated national resilience program to protect northern Australian residents from severe weather and help reduce premiums. 

“We believe if there is government intervention in northern Australia, it should be focused on reducing vulnerability through land-use planning, building codes and better funding for mitigation and retro-fitting,” Mr Justice said.