The Queensland Government has called for more information and broader consultation on the proposed cyclone reinsurance pool to be explored by the Federal Treasury and the insurance industry.

As previously reported, the feasibility of a government-backed pool will be investigated as a possible measure to bring down premiums in northern Australia, after insurers and Federal Assistant Treasurer Michael Sukkar reached agreement following discussions in Townsville.

This marks a change in position for the insurance industry and the Insurance Council of Australia (ICA), which has previously mounted strong opposition to government intervention in the market. insuranceNEWS.com.au has outlined the background here. 

Queensland Treasurer Jackie Trad told insuranceNEWS.com.au the Palaszczuk Government “welcomes at long last some movement from the Federal Government to fix the ongoing problems with the insurance market in North Queensland”.

But Ms Trad says more detail is needed on the proposed pool.

“A North Queensland cyclone reinsurance pool could help reduce premiums if designed correctly. There has been scant detail provided and I call on the Federal Government to include all stakeholders in the consultation on the design [of] this program.”

Mr Sukkar has criticised the Queensland Government for failing to abolish insurance taxes, but Ms Trad did not respond on this particular issue despite insuranceNEWS.com.au putting a series of questions on the subject to her.

“The Labor Party with a stroke of a pen could reduce every person’s premium by 10%,” Mr Sukkar said.

“I’ve made very clear … that we will do our bit by hook or by crook, but we expect the Labor Party not to be gouging north Queenslanders by imposing stamp duty on premiums.”

The National Insurance Brokers Association (NIBA) has welcomed the agreement to investigate the reinsurance pool solution.

NIBA was not invited to the Townsville meeting, but has previously argued in favour of considering “some form of government intervention”.

“It is certainly something that should be seriously explored, and we welcome that there is engagement between the Government and insurers,” CEO Dallas Booth told insuranceNEWS.com.au.

However, Mr Booth emphasised that NIBA backs ICA’s position that investment in mitigation and resilience is the most important way to sustainably reduce premiums.

“We totally support the idea that the No.1 thing has to be proper management of the built environment,” he said. “The built environment has to be able to cope with Australian weather.

“But we have an existing issue in north Queensland where there is a high cost of exposure and not a huge population to spread it across.

“That’s where you run into problems with affordability.”