IAG has joined the wider industry in calling for increased mitigation funding to deal with northern Australia’s insurance problem. The insurer has had a longstanding position favouring spending more on resilience measures.

And it has stated its opposition to any form of government intervention to set premium prices, joining rival insurance giant Suncorp.

Both companies make their cases in submissions to the Australian Competition and Consumer Commission’s (ACCC) second update on insurance affordability.

Allianz is the only major insurer that has pushed for a government-backed reinsurance facility. The German insurer has had a position over the past few years that mitigation alone is not enough.

“We believe that mitigation measures in conjunction with a government-backed reinsurance facility would be the most efficient and effective way of reducing extreme premiums faced by households,” Allianz says in its submission.

IAG argues government intervention is not warranted as there is no market failure in the northern region.

Rather the Government should adopt a “prevention is better than cure” mindset to fix the problem, it says.

It again urged Canberra to increase mitigation funding to state and territory governments to $200 million a year.

The Australian Prudential Regulation Authority (APRA) has also expressed support for more money to increase national disaster resilience.

The regulator was more reserved on the idea of a reinsurance pool. It says the measure does not address underlying causes of premium woes or reduce the overall cost of insurance. Caution must be taken when designing such schemes, it adds.

See ANALYSIS