The federal government has provided for funds of A$7.9 million (US$5.8 million) over four years to the Australian Competition and Consumer Commission to monitor insurance in weather-prone northern Australia.
The fund allocation was announced by Treasurer Scott Morrison on Wednesday in his Budget Speech for the fiscal year commencing on 1 July.
This appears to be a response to criticism that the government has failed so far to act on a study designed to ease the burden of insurance in Northern Australia. A report from the Northern Australia Insurance Premiums Taskforce was finalised in November 2015. The federal government was expected to give a formal reply to the findings by 30 June last year.
More pressure was exerted on the government to act in the wake of Cyclone Debbie which lashed Southeast Queensland and Northeast South Wales at the end of March.
Mr Warren Entsch, a north Queensland government MP, said that Cyclone Debbie highlighted the problems that exist. He said that a government mutual fund could provide Queenslanders with compulsory basic cyclone cover, in combination with private insurance for other natural disasters.
However, the Northern Australia Insurance Premiums Taskforce was not in favour of a government mutual fund. It backed mitigation measures and warned that a mutual or reinsurance pool could cost the government billions of dollars. Insurers are also against the idea of a mutual and have been calling for funds to be allocated for mitigation measures.
In March, a spokesman for Minister for Revenue and Financial Services Kelly O’Dwyer said: “These are complex issues which the government is carefully considering. In the meantime, there are immediate actions the Queensland government could take to reduce premiums including removing stamp duty and addressing strata title regulations which place pressure on premiums.
“Additionally, the government has clearly communicated to insurers that they must ensure any mitigation efforts undertaken by consumers are being reflected in the premiums being charged.”