North Queensland strata insurance prices are reasonable: Insurance Council of Australia

North Queensland strata insurance prices are reasonable: Insurance Council of Australia
Jennifer DukeDecember 7, 2020

The Australian Government Actuary’s latest strata title pricing report has the Insurance Council of Australia saying that the system in Queensland is efficient and that intervention cannot be justified.

This comes after the Strata Community Australia Queensland branch president Simon Barnard said that strata insurances had skyrocketed – up 200% over the last five years in some instances.

This is the second report on Strata Title Insurance Price Rises in North Queensland, and ICA’s CEO Rob Whelan said that the conclusion is that North Queensland has much higher risk compared to other markets, and that pricing is “reasonable”.

“The Australian Government Actuary conducted a thorough and independent investigation using claims data going back to 2005-6. The report provides the facts about strata pricing in east coast and northern Australian insurance markets, and explains the complex pricing factors in play in the volatile North Queensland market,” said Whelan.

He said that the report notes insurers are not gouging and are instead providing appropriate risk-priced products after a period of underpricing, which now reflects the region’s exposure to cyclones.

“The report supports the evidence that insurers have provided to the Federal and Queensland governments since 2011, and also demonstrates that pricing is reasonable,” he said.

Despite noting that the prices are reasonable, Whelan said that they are looking into developing affordability initiatives looking to show the relationship between risk, available data and premiums.

“Market driven responses are the only practical and appropriate solution, and we implore governments to take this report into account before considering any form of intervention,” he said.

“The greatest risk for governments in market intervention is reduced competition and consequently further negative pricing pressures for consumers.”

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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