A Victorian Government discussion paper on increasing insurance among low-income earners flags removal of the 10% stamp duty on home policies as an option.

“Reduction or elimination of this charge would make insurance more affordable, provided it is passed on in full,” the paper from the Department of Health and Human Services (DHHS) and Victorian Council of Social Service (VCOSS) says.

The departments are developing a strategy to address non-insurance and underinsurance among people who can least afford the cost of emergencies.

Assistance from governments under the Natural Disaster Relief and Recovery Arrangements does not meet all costs, while various other sources of help cannot fill the gap, they say.

“It is evident that many people, in particular low-income households and many in high-risk areas, do not carry any or sufficient insurance to support their recovery,” DHHS Deputy Secretary Melissa Skilbeck says.

“After an emergency they may be unable to restore their previous lifestyle and can descend into poverty.”

The report says Victoria has experience removing an insurance-related charge – the fire services levy in 2013 – and calls for comment on the effect of that change.

 “It is not known what impact, if any, this reduction in insurance premium costs had on the sales of insurance, either on the number of policies or sums insured,” the Victorian report says.

Only the ACT Government has removed stamp duty on insurance policies, despite a prolonged insurance industry campaign covering all states.

Other options to improve affordability include allowing social housing tenants to pay insurance premiums with their rent payments, mitigation and peer-to-peer insurance.

The report also calls for comment on issues such as the impact of improved risk awareness.

Responses to the discussion paper are due by Friday to recovery@dhhs.vic.gov.au.