Labor supports the reinsurance pool, however, there were several issues raised throughout the duration of the inquiry.
North Queenslanders, who are paying record prices for home and strata insurance or can't access any cover at all, are still being denied key details on how the Morrison-Joyce government will deliver any savings through a reinsurance pool.
Labor Senators asked Treasury several questions throughout the public hearing about the modelling that underpins the governments claims about reductions — instead of releasing this key modelling, they claimed public interest immunity.
It's not only Labor that has been calling for the government to release the modelling, but also insurance bodies and key stakeholders. Many have not seen the modelling, nor the key data assumptions which will allow them to provide information to their members about the impacts of this policy.
In its submission to the Inquiry, the Royal Automobile Club of Queensland (RACQ) submitted:
To date, RACQ cannot assess the impact the pool will have on our member's home insurance premiums, primarily because we have not received proposed pricing rates or associated modelling from the Australian Reinsurance Pool Corporation [ARPC].
Ms Tracy Green from RACQ reiterated this point during the public hearing by further adding that:
… the reality is that we cannot determine the savings at this point in time until we see more information and that includes the price from the ARPC. We need to understand what the pool is going to cover.
Representing the Northern Australian Insurance Lobby (NAIL), Mr Tyrone Shandiman said that NAIL would like to see the modelling which would allow them to see how it would impact policy holders:
We would love to see the modelling and how that will impact policyholders, because it says 'up to 46 per cent'. Are 90 per cent of people going to get a five per cent saving and only 10 per cent get the 46 per cent saving? Or, more broadly, will we see more in the upper category rather than the lower savings? For transparency, we would like to see the modelling of how those savings will be passed on to consumers. Failing that, we will see how that pans out when the legislation passes.
Sure Insurance raised concerns that policy holders could see some premium prices increase as a result of the legislation:
The prospect of some policy holders being potentially handed a non-negotiable price rise because of the pool's introduction is clearly not acceptable for Sure's customers, and may potentially be viewed as a failure of government policy in its stated public commitment to insurance affordability.
Mr Bradley Heath from Sure Insurance went on to say:
The sooner we see the numbers, the sooner we can provide feedback on where the 'gaps' may or may not be and where the areas of attention should apply. As I say, we're committed to trying to make this work one way or the other. If we can make it work, and if we can deliver some or all of our policyholders a cheaper price, then that would pretty much—if we don't do that and we don't support that, that would go against why Sure was created only three years ago, to provide a better price for regional Queensland.
The Strata Community Association (SCA) were asked if they think the modelling should be released and said:
Absolutely. We would like to see the modelling. As Chris said, we're cautiously optimistic that those savings can be delivered to consumers in strata, but we're also mindful of managing expectations. Now that the consumers have an expectation of up to 56 per cent reduction in premiums, we'd like to see that delivered and we'd like the modelling to support how those numbers can be delivered for consumers.
Labor Senators support the calls by multiple stakeholders to extend the proposed related damage period from 48 hours to 168 hours (seven days). These calls are presented in the report and are made by the National Insurance Brokers Association (NIBA), Northern Territory Chamber of Commerce (NTCC), the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), the Council of Small Business Australia (COSBOA) and North Queensland Regional Organisation of Councils (NQROC).
RACQ also called for the claims period extension saying:
We believe that the claims period that is defined in the legislation should be amended. The claims period, in our view, will hold the pool back from reaching its potential because it adds uncertainty, complexity and ultimately cost into the system. This means it will limit the benefit we can provide to our members. Specifically, we are asking for the claims period to shift from a very narrow period, which is the duration of a cyclone plus 48 hours, to a period that more closely resembles normal reinsurance market practice, which typically operates on a 168-hour clause or a seven-day period.
Labor also believes that more needs to be done to improve Australia’s disaster readiness prevention projects including flood levies, sea walls, cyclone shelters and evacuation centres. This approach will assist with spiralling insurance premiums in disaster-prone regions by reducing the risk of expensive damage to homes and businesses.
The government has made a number of claims about apparent savings yet won’t release the modelling or any data to insurance agencies. Labor believes that the government should do that as soon as possible to ensure transparency to both insurance companies and policy holders.
Labor calls on the government to spend more on disaster mitigation as an effective way of helping to reduce damage to homes and businesses.