Spiralling insurance costs have sent businesses bust, while householders have seen premiums rise 1000%, the Federal Parliament’s committee on the development of northern Australia has heard.

The committee has visited Queensland, WA and the NT.

In Queensland and WA it heard high insurance costs and lack of capacity are impeding economic development.

Committee chairman Warren Entsch, whose Leichhardt electorate covers north Queensland, told insuranceNEWS.com.au further research is needed into the impact of insurance costs on business and householders.

“If we want to populate the north we have to have affordable and accessible insurance,” the Liberal MP said.

There were few complaints when the committee sat in Darwin, which Mr Entsch says is thanks to cover provided by TIO.

Insurance company representatives grilled at the Brisbane hearing on May 30 argued there is no insurance market failure in north Queensland.

IAG Direct Head of Commercial Pricing and Underwriting Tracy Green says the region shows how lack of investment in disaster mitigation affects the cost of insurance.

Suncorp Home Insurance EM Stephen Jeffery says development of the north must be “planned and built in a sensible and sustainable way that acknowledges the range of risks the region is exposed to”.

Unless better understanding of risk, improved planning and a strict commitment to resilience – including retrofitting – are in place, “there is the possibility that it will be challenging for the area to grow economically without insurance becoming easier to arrange”.

Queensland Chamber of Commerce and Industry GM Advocacy Nick Behrens told the hearing business insurance costs are rising 20% a year and there seems to be market failure in the north.

“Insurance companies are seeking to withdraw from that market and are doing so either by discontinuing insurance policies or by ratcheting up insurance prices to the point where it is no longer affordable for that business to [renew its policy],” he said.

Committee member Barry O’Sullivan, a National Party senator for Queensland, says some rural constituents cannot get cover and “the industry needs to have a good, hard look at itself and get this levelled out”. He warns of further government intervention otherwise.

The committee’s interim report will be released next week.

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