Northern Aust to get property premium cuts

·2-min read

People in northern Australia should see their property insurance premiums fall after Prime Minister Scott Morrison announced a $10 billion scheme for the region.

A reinsurance pool will be set up by July 2022 to subsidise high premium costs in the north due to a high volume of disaster events.

But taxpayers will have to subsidise the effective transfer of risk from individuals to the government.

Mr Morrison did not speculate on how much premiums might fall, saying only that the government was taking "take a cautious view on that."

In recent years, multiple floods, cyclones or other bad weather events have flattened and damaged properties, prompting insurers to hike premiums.

More than 500,000 property insurance policies are expected to eligible for the scheme.

Mr Morrison noted the reinsurance pool was something residents had been calling on for "some time."

"What this does is, basically, put a floor underneath the insurance industry up in north Queensland and that will encourage more insurance companies into the market," he told Cairns radio on Tuesday.

"What's important is we've got $10 billion inside of a guarantee on the insurance sector out there, so we can get more companies in ... which is very important to drive down the cost of those premiums."

Storm-affected premiums in north Queensland are three times the price of the rest of Australia.

Mr Morrison also said the federal government would step in to reduce body corporate fees in the region.

It has set up a $40 million pilot program for "strata title resilience" in north Queensland to deal with the rising cost of body corporate fees.

"It's a three-year resilience pilot and $40 million to review cyclone risk for residential strata properties in northern Australia," Mr Morrison said.

"They face some of the most acute insurance affordability pressures in northern Australia."

According to Australian Competition and Consumer Commission data, the average strata premium is $6800 in north Queensland compared to about $3000 for the rest of Australia.

"It's been a cause of grave concern in the north for a very long time," Mr Morrison said.

The Local Government Association of Queensland said the new reinsurance pool would address "market failure".

"A reinsurance pool will mean better access to crucial home and business insurance cover for the more than 61,000 north Queenslanders who, up until now, have had to go without because the cost was simply too high," association president Mark Jamieson said.

Meanwhile, Kennedy MP Bob Katter says the reinsurance pool is a "great victory" for the people of north Queensland, but he will seek full disclosure from the government regarding its implementation.

"The message to the federal government was very clear. They could create a reinsurance pool voluntarily or they'd be forced to do it," Mr Katter said in a statement.

"We are seeking the full details to make sure this reinsurance pool does the job that it needs to do."