Insuring property in northern Australia has always been expensive and challenging for insurers, and no amount of finger-pointing by residents and politicians is going to change that fact.

Stripped down to its essential point, that’s how the Insurance Council of Australia’s (ICA) latest submission on the issue of premiums in northern Australia deals with several years of community campaigning and political action.

ICA’s submission to the Australian Competition and Consumer Commission’s (ACCC) pricing inquiry rejects suggestions that overcharging and lack of competition are to blame for making insurance expensive in the region.

“The reality… is the region has historically been challenging for insurers and remains a difficult environment in which to operate,” it says.

“Northern Australia has much higher exposures and claims costs. Suggestions that high premiums can most simply be explained by a lack of competition fail to recognise the unique nature of high-risk regions and the regulatory and operational frameworks within which insurance must operate in Australia.”

ICA says the northern insurance market is small, accounting for just 4.6% of Australian addresses, but is disproportionately exposed to large, frequent natural disasters.

Claims costs are significantly higher because residents are not served by the same infrastructure for goods and services as in the south, which means rebuilding costs are up to 42% more expensive after each disaster.

In northern Queensland, normalised claims costs are five times higher than Sydney, Brisbane and Melbourne, ICA says.

“It is more expensive to insure in the north, reflective of the risk and claims costs. Higher claims costs, a higher frequency of events and often extreme operational difficulties in servicing claims due to the remoteness of some areas results in fewer insurers operating in the north.”

But competition remains despite the smaller pool of insurers, it says. Premiums are competitive and priced at individual-address level rather than by postcode.

“No significant insurers have left the market in northern Australia in the past decade. However, some have modified their underwriting requirements over time, avoiding properties where the risk is considered beyond their capacity to service or expertise to manage.”

The ACCC inquiry into residential building, contents and strata insurance pricing in northern Australia will provide its first interim report to the Treasurer in November.