The cost and affordability of insurance in Far North Queensland, particularly strata cover, will be up for discussion when industry representatives meet Assistant Treasurer Arthur Sinodinos on Wednesday.

State and federal parliamentarians have called for action, with Queensland Premier Campbell Newman last week arguing high insurance costs are holding back economic development in the region.

There are signs strata prices have stopped rising, with new capacity entering the market, but brokers have told insuranceNEWS.com.au cover can be hard to obtain and expensive for commercial and residential insureds.

Joe Vella, MD of Joe Vella Insurance Brokers, says clients are reducing sums insured, while some householders are buying cheaper, online cover that does not match their risk.

Research on strata by James Cook University – commissioned by the Insurance Council of Australia – recommends regular strata property inspections and other measures to cut risk.

For CGU-owned Strata Unit Underwriters, the largest strata insurer in the region, implementation of James Cook’s recommendations would be an important long-term step, but no short-term pricing solution.

“A major factor in pricing is prior loss experience,” National Manager Brad Robson told insuranceNEWS.com.au.

“We would need to see general improvements in the quality of construction and upkeep of properties, which then flows onto lower claims costs and ultimately a reduced premium.

“It is important to be aware that a significant portion of premium is reinsurance, and reinsurance premiums are not risk-specific, they are calculated by region.”

He says reinsurance is bought for an aggregate value of all risks in a region, so there is no relief on costs for individual properties that have less risk.

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