The House of Representatives inquiry into the insurance response to disasters has been extended to cover residential strata title insurance and will hold public hearings in northern Queensland in January.

The inquiry will hear submissions about alleged increases of up to 800% in premiums and lack of competition in the market.

The inquiry by the Standing Committee on Social Policy and Legal Affairs will hold public hearings in late January, travelling between Mackay and Port Douglas.

Public hearings had been expected to end last week, but Assistant Treasurer Bill Shorten added new terms of reference focusing on strata insurance after lobbying by Queensland Labor and Coalition MPs.

“In particular I’ve been concerned about the news coming out of cities and towns like Cairns, Townsville, Port Douglas and others in the region, where anecdotal evidence suggests residential strata insurance is becoming an increasing issue,” Mr Shorten said.

The added terms of reference direct the committee to inquire into strata insurance cost increases over the past five years, insurers’ ability to price risk and the accuracy of the data they use, as well as the extent to which there is a failure in the insurance market such as through lack of competition.

The hearings are protected by parliamentary privilege and although the committee asks those appearing not to name companies or individuals, at times they do.

Earlier this month Liberal MP Warren Entsch, whose federal electorate of Leichhardt takes in Cairns and Far North Queensland, and Queensland Labor senator Jan McLucas attended a meeting in Cairns of 150 strata owners, managers and real estate agents to hear concerns that insurance has become unaffordable.

Mr Entsch told insuranceNEWS.com.au that retirees on fixed incomes can’t afford steep premium increases and can’t sell their units because the higher body corporate fees have wiped out any return to an investor.

“There will be a lot of people who will become homeless, it is as simple as that,” he said. 

Mr Entsch will be a supplementary member of the committee for the January hearings and his concerns have also been taken to the Australian Competition and Consumer Commission.

He suggests northern Queensland could adopt a Northern Territory-style system, where strata insurance is affordable because the Government underwrites policies through the Territory Insurance Office.

Mr Entsch says strata owners have complained about a lack of insurers in the market and that risk assessments do not take into account improved building codes that have made structures much more resistant to cyclone damage.