A federal minister has joined the insurance industry in criticising the Queensland Government for increasing stamp duty on general insurance products from 7.5% to 9%.

Queensland Treasurer Tim Nicholls announced the changes before tomorrow’s state budget.

“If we’re going to maintain the key government services that Queenslanders want, we have to take measures to stem the loss of government income,” he said.

The move – adding $25 to a premium on a $300,000 home with $75,000 of contents – will help fund the national disability insurance scheme, he says.

But Federal Financial Services Minister Bill Shorten says the move will “drive up insurance for Queensland families, particularly [people] in north Queensland who have already been hit hard by steep rises in premiums”.

“This is despite the HIH Royal Commission, the Henry review and the Johnson report recommending that insurance duty be abolished, and the parliamentary In the Wake of Disasters report recommending Queensland have a 12-month moratorium on insurance duty in the north of the state.”

National Insurance Brokers Association CEO Dallas Booth says insurance taxes are “bad social policy”.

“Economic research has shown that replacing taxes such as stamp duty with new or increased broader-based taxes will provide a significant boost to GDP,” he said.

“It defies logic that the Queensland Government would be increasing stamp duty on insurance policies such as home and contents insurance at a time when it has paid out record amounts of flood relief in the past two years to those who were uninsured or underinsured.”

Insurance Council of Australia (ICA) CEO Rob Whelan says the move could lead to more underinsurance and non-insurance, particularly in areas exposed to floods and cyclones.

“Stamp duties are inequitable, highly inefficient and unfair,” he said. “You cannot improve insurance affordability by increasing insurance costs.”

Insurers contacted by insuranceNEWS.com.au declined to comment further, saying only they agreed with ICA’s statement.