The Real Estate Institute of Queensland (REIQ) is urging both the federal and state governments to implement programs that will guarantee affordable insurance premiums for all Queensland residents.
The call comes in the wake of a series of devastating events across the state, raising concerns that insurance premiums may become unaffordable for a significant number of Queensland homeowners.
Antonia Mercorella, CEO of REIQ, highlighted the urgent need for an expedited insurance pool in Queensland, particularly in regions hit hard by recent cyclones and flooding.
In North Queensland, home and contents insurance premiums average $2,918 per annum, a staggering 64% higher than in southern parts of the state. Moreover, the cost of higher-value strata (unit) insurance in North Queensland is three times greater than the national average, with potential for even more significant disparities depending on the property's location.
“The high insurance premiums are not only prohibitive to some buyers; they also act as a disincentive for construction of new dwellings,” Mercorella said.
She pointed out that the Federal Reinsurance Pool, initiated on July 1 with a $10 billion Commonwealth Guarantee, has been slow to result in premium reductions in Far North Queensland.
“It does little to mitigate insurer risk when the scheme includes a 48-hour cessation date after the event, meaning damage which occurs afterward is not covered for insurers – this needs to be revised to ensure it actually achieves what it sets out to do,” Mercorella said.
Mercorella suggested that, considering the array of natural disasters in Queensland, from fires to floods, it is imperative for the Queensland government to explore all available options to restore affordability in insurance.
REIQ proposed a program similar to New Zealand, where a small percentage of all home insurance policies is set aside in an investment fund. This fund would offer quick access for consumers in the event of a natural disaster.
The Queensland government is also urged to prioritise the development of natural disaster mitigating infrastructure to reduce insurance costs for residents in vulnerable regions.
“The lost productivity and impact to small business needs to be addressed to reflect a modern economy,” Mercorella said.
With the Queensland treasurer indicating the state’s strong financial position, REIQ believes now is the opportune time to leverage this strength for the benefit of Queenslanders, ensuring affordable insurance options regardless of location.
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