Former Treasury executive director Mike Callaghan has been made head of the Northern Australia Insurance Premiums Taskforce, to examine setting up a cyclone mutual or reinsurance pool.

“Mr Callaghan brings strategic senior leadership experience from both the public and private sector to the taskforce,” Assistant Treasurer Josh Frydenberg said.

The taskforce will produce an interim report after three months and a final report by November, making recommendations to the Federal Government.

Mr Callaghan is a current fellow and former program director at the Lowy Institute for International Policy. He was an adviser to former treasurer Peter Costello, and served as international executive director in Treasury from 2008-12 after being revenue executive director from 2005-07. 

Regis Mutual Management Australian COO Gerald Ewing has also been named a taskforce member. He is a fellow of the Association of Average Adjusters and has 35 years’ experience in insurance and mutuals.

The taskforce will investigate creating a government-run cyclone reinsurance pool or mutual cyclone insurer in northern Australia to reduce home, contents and strata premiums.

Its announcement in March followed months of lobbying by Cairns-based federal MP Warren Entsch.

Other taskforce members include Insurance Council of Australia CEO Rob Whelan, National Insurance Brokers Association CEO Dallas Booth, Australian Reinsurance Pool Corporation Chairman Joan Fitzpatrick and Financial Counselling Australia Executive Director Fiona Guthrie.

Townsville-based insurance consumer advocate Margaret Shaw has been appointed consumer representative to the taskforce. The retired IT consultant was nominated for Australian of the Year for her “work with the central and north Queensland insurance crisis”.

The taskforce will establish which regions experience acute insurance affordability concerns due to cyclone risk, evaluate potential cuts to premiums, and examine the cost and risk of using federal funds to lower the cost of insurance and the effect on industry competition.

Mr Ewing told insuranceNEWS.com.au the idea of a mutual is just one of the options being examined by the taskforce and “it is early days yet”.

“Mutuals have been around for a very long time and do provide a model for community ownership, including risk,” he said. “They can really deal with the sort of problems that are being faced in northern Australia. There are schemes around certainly in terms of the Earthquake Commission in New Zealand that have similar features, although they may not be structured as mutuals.”

A white paper from a federal parliamentary committee – chaired by Mr Entsch – seeking ways to develop northern Australia will be released soon. It will include the cost of insurance.

Mr Entsch welcomed Ms Shaw’s appointment, saying she has a wealth of knowledge about the insurance industry combined with the experience of being the treasurer of a body corporate for a 25-unit apartment complex.

He says Mr Ewing’s involvement is also welcome because Regis, in partnership with a major international reinsurer, “has raised the potential of an insurance mutual for the region”.

“This is the option that I support, as it would need government support at the establishment stage but then would become self-sufficient, an asset owned by the policyholders of northern Australia,” Mr Entsch said.