High premiums in north Queensland have made insurance there a public policy matter, Assistant Treasurer Josh Frydenberg says.

“Insurance affordability in north Queensland is a critical issue for the Abbott Government,” he told the Insurance Council of Australia (ICA) regulatory update last week.

Mr Frydenberg says there would be outrage if Sydney and Melbourne homeowners had to pay the same level of premiums.

He says the Government is conscious of the risk of allowing unauthorised foreign insurers (UFIs) to write personal lines cover, and it will shortly consult the industry.

“The industry has a role to play to design more flexible products to meet the needs of north Queensland,” he said in his first speech on insurance since becoming Assistant Treasurer in December. “It is better for consumers to have some insurance cover than none at all.”

insuranceNEWS.com.au later asked Mr Frydenberg why UFIs would come to Queensland when local insurers have been paying out more in claims than they earn in premiums.

He says the Government wants to increase competition and make insurance more affordable.

Seminar delegates were earlier welcomed by ICA President and IAG Personal Insurance CEO Andy Cornish, who said north Queensland has been hit by several large natural disasters in recent years and customers need insurers with the resources to respond quickly and efficiently.

“It is at this time the partnerships we have built over many years prove their value to customers,” he said. North Queensland homes have not been built to modern standards and “this is a generational issue that needs to be addressed”.

Premiums there have declined sharply in recent months.

Mr Cornish says there is no “magic bullet”, but removing state taxes on insurance would give consumers quick relief.

Shadow Treasurer Chris Bowen told the seminar Labor views UFIs as “a great risk”, and he will need to be convinced about them.

“They may be cheaper but you may be opening up a situation after a major natural disaster of people not being appropriately insured or their insurers not providing adequate care and support because they are unregulated or under-regulated in Australia.

“We have regulation of insurance for a very good reason.”

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