Economic realities and the installation of a prime minister with a sharper focus on the economy are easing industry concerns that the Federal Government may intervene in the northern Australian property insurance market.

Informed industry sources have told insuranceNEWS.com.au they now see the introduction of a government-backed mutual insurer or reinsurance pool to reduce allegedly unaffordable property premiums as less likely.

They say new Prime Minister Malcolm Turnbull, who replaced Tony Abbott last week, understands commercial matters and is regarded as “less interventionist” in market issues.

New Assistant Treasurer Kelly O’Dwyer is regarded as an economic “dry”, like Mr Turnbull.

The industry has provided the Federal Government with extensive modelling showing insurance losses from cyclones average about $630 million a year, while a one-in-10-year cyclone would cost insurers $1.4 billion.

Documents seen by insuranceNEWS.com.au also reveal that insurers and the Insurance Council of Australia have been blunt in their warnings to the Government not to get involved in alternative insurance schemes that would have little impact on premiums but would lock taxpayers into a “long-term significant budgetary burden”.

The Northern Australia Insurance Premiums Taskforce, which was set up by the Government to investigate options to drive down prices, will make its final report in November.

Submissions by insurers regarding the taskforce’s August interim report have made a strong case to move the issue away from alternative insurance solutions and focus on the need for resilience.

“We’ve demonstrated through very solid research that the only feasible way to improve the situation is to build stronger homes, not fiddle with the insurance market,” one source said.

Considerable input by researchers, including the Liberal Party’s favoured research house Crosby Textor, has been included in submissions that dismiss contentions there has been a market failure in northern Queensland and that premiums are unaffordable.

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