QLD councils call for federal government to help keep insurance premiums down

In the past decade, insurance premiums in northern Australia have skyrocketed. 

A 2019 report from the ACCC shows that the average price of home building insurance in these areas rose a whopping 178% between 2007/08 and 2018/19. Now the Local Government Association of Queensland is calling on the federal government to establish a reinsurance pool, to help keep costs down for northern Australian residents.

A not-for-profit, LGAQ represents the collective interests of 77 councils in Queensland. Now in support of members, including Townsville City Council and the Whitsunday Regional Council, LGAQ has requested a national reinsurance pool in its Federal Budget submission to the Commonwealth.

What is a reinsurance pool?

In short, reinsurance is a way to reduce risk. It is basically when multiple insurance companies purchase policies from other insurance companies. This is essentially to share risk and avoid a total loss for one company, in case of disasters. The Reinsurance Association of America describes it as ‘insurance of insurance companies.’

So in this instance, insurance companies could potentially cede a certain amount of risk to the Federal government. This would lower the overall risk for individual insurance providers and keep insurance premiums down for residents in disaster-affected areas.

LGAQ President and Sunshine Coast Council Mayor Mark Jamieson said that currently more than 62,000 homes in North Queensland are uninsured. More than 95% cite the high cost of insurance as the reason for this.

He said, “Our members councils want a reinsurance pool established to help reduce those costs so their communities are not unfairly burdened, and we support their call.”

Townsville Mayor Jenny Hill added that the federal government has done this before. Here Hill refers to the ‘Terrorism Insurance Act 2003.’ This was a reinsurance pool set up following 9/11, when insurance companies withdrew terrorism cover from policies.

Whitsunday Regional Council Mayor Andrew Willcox added, “It is not just homeowners who are struggling with high premiums, but also our tourism accommodation and marine operators face similar prohibitive expenses.”

Comparing home insurance

It remains to be seen how the federal government will respond to this call to action. In the meantime, if you are in need of insurance, why not head to Mozo’s compare home insurance page. Here you can compare cover from a number of insurance providers and gather quotes to see which ones can offer the most competitive price. 

You can also check out our guides and previous articles, to learn more about insurance in general. This includes information on underinsurance and how to avoid it.