The Insurance Council of Australia (ICA) wants the Federal Government to provide financial assistance to people in northern Australia whose homes need to be made more cyclone-resistant.

It says the Government’s stated preference for a mutual insurer or reinsurance pool to counter allegedly unaffordable premiums in the region would force it to shoulder a “significant and long-term financial burden” but do nothing to reduce risks.

The council’s submission on the Northern Australia Insurance Premiums Taskforce interim report uses evidence commissioned from a range of consultants to refute the supposition that premiums in the region are unaffordable and have caused high levels of underinsurance.

The submission – which has yet to be made public by the taskforce or ICA but has been seen by insuranceNEWS.com.au – says paying for a strengthening program “represents a fraction of the cost” of financing a mutual insurer or reinsurance pool, and would result in “a measurable response from the industry with lower premiums”.

“While a market intervention by the Government to artificially lower premiums may have some popular appeal, the only sustainable approach to premium reduction is to mitigate the underlying risks,” ICA says.

“Introducing a regime that fails to reduce the risk and is a persistent burden to future taxpayers is poor public policy.”

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