After years of pain, Scott Morrison is ready to solve the North Queensland insurance crisis. This is how it will work.
The North Queenslanders were devastated by the cyclone’s double blow and insurers have refused to cover them or charge sky-high premiums will finally get some relief under a long-awaited project to be revealed today.
Prime Minister Scott Morrison will be in Queensland in Tuesday to announce a $10 billion guarantee aimed at dropping insurance bills and ensure people can actually enter into any policy.
Insurance skyrocketed after one catastrophic cyclone in northern Queensland, with the average premium for strata property in north Queensland hitting $6800 a year, compared to the national average of $3000.
The project will be a $10 billion reinsurance pool, or guarantee for insurers, and will apply to approximately 500,000 residential, strata and business policies within 100 kilometers of Rockhampton North and on both sides of the coastline.
It will begin in July 2022. The $10 billion guarantee effectively acts as “insurance for the insurance”, taking away risks for insurers and encouraging them to return to the market or offer policies at a lower price.
There will be a separate plan for strata holders, with a $40 million in funding to contribute to cyclone-proofing buildings to provide further incentives for insurers to lower prices.
Official backbenchers such as Phil Thompson, George Christensen, Warren Ants and Susan MacDonald often raised red-hot issues in meetings in the Coalition Party chambers and directly with the Prime Minister.
For properties over 10 years, it is expected to bring down the price by $1.5 billion, although a change in individual policy means that there is no current estimate of the depreciation of individuals.
Mr. Morrison said the plan would allow Australians to have more affordable insurance in cyclone-prone areas.
Homeowners and businesses have faced with crippling insurance costs, and in some cases, cannot get insurance at all. That’s not right and we’re going to change that,” he said.
Herbert MP Phil Thompson said insurance was important like water and electricity, was vital and the reinsurance pool would give access could back to North Queenslanders.
“People in North Queensland deserve to have insurance like anywhere else in the country,” he added.
“It’s a victory for this community that is suffering from high insurance prices, because it’s their voice that got the result.”
Details of both projects have not yet been finalized. It is being investigated whether consumer watchdog, the Australian Competition and Consumer Commission, can be used to monitor prices to ensure savings are passed on.
The second scheme, known as the North Queensland Strata Title Resilience Pilot Program, a $ 40 million fund will be used to reduce damage by cyclones or to approve practical works aimed at reducing damage caused by cyclones to their buildings such as retaining walls.
It will operate on a co-contribution basis and will be evaluated by the government by strata body to apply for funding for a risk mitigation project.
The federal government will also seek contributions from the Queensland government for the scheme, an agreement aimed at concluding an agreement later this year to start this strata scheme in January 1.