Prime Minister Tony Abbott has called on the insurance industry to “explain itself” over high property premiums in northern Australia and hinted that a solution could involve “new entrants” or “different types of insurance products”.

Speaking on Cairns radio station 4CA last week, Mr Abbott said he finds it difficult “to understand why the insurers have felt the need to change the premiums as dramatically as they have for northern Australia”.

“It hasn’t, as I understand it, [changed] anything like the same extent in Brisbane, even though we’ve seen, over the last couple of years, some significant natural events in Brisbane, with all the flooding that took place in 2011…

“So I think the industry needs to explain itself, and obviously we need to work out a way forward.

“Now maybe it’ll be a way forward with the existing insurers, maybe it will be a way forward that involves new entrants, maybe it will be a way forward that involves different types of insurance product.

“But we will have a way forward very, very soon, because the [Northern Australia Insurance Premiums] taskforce will be reporting before the end of the year, and early in the new year we’ll have some solutions.”

Insurance Council of Australia spokesman Campbell Fuller told insuranceNEWS.com.au the council and member companies are participating in the Government's taskforce “and are working with all the stakeholders to find practical, sensible and sustainable solutions”.    

Comment: 

Prime ministers have in the past been notoriously susceptible to taking a free kick at insurers after natural catastrophes strike communities.

Such comments have usually gone unchallenged by the industry, although negative comments made in 2009 by then-prime minister Kevin Rudd about the industry’s performance following Victoria’s Black Saturday bushfires were challenged by a senior industry CEO.

Well-informed sources told insuranceNEWS.com.au at the time that the CEO contacted Mr Rudd’s office and made his thoughts clear.

Shortly afterwards, a delegation of senior industry executives met with then-assistant treasurer Chris Bowen and the government’s attitude “was much more positive towards the industry after that meeting”.

In the case of northern Australia, the situation is more complex and obviously a tad beyond Mr Abbott. When a caller to the radio station put him on the spot about high premiums and linked them to a “failing economy” in Cairns, he put it back on the industry. Any politician in that situation would.

The Prime Minister has never worked in a finance portfolio and his overview of this particular issue – and his knowledge of the insurance industry – would be marginal at best.

Most of his comments are little more than the sort of bluster ministers often emit when faced with the need to comment on the spot about things they know next to nothing about.