Chambers Unite for Insurance Reform
A united front will be adopted by the Hinchinbrook and Townsville Chambers of Commerce as they tackle rising insurance premiums, market failure and stamp duty on commercial and farm insurance following the ACCC report into the Northern Australia Insurance Inquiry.
While the inquiry focused on domestic insurance, the two chambers believe findings could be applied to commercial insurance and used to support their joint advocacy efforts to remove Stamp Duty from insurance products.
According to the ACCC report, the revenue generated by governments on household and strata insurance alone in North Queensland was $65.3m in GST and $64.6m in Stamp Duty in 2018/2019.
Hinchinbrook Chamber President Rachael Coco said it was evident that North Queensland paid “more than its fair share in taxes”, claiming a commensurate return in the form of services and infrastructure was “sorely lacking.”
“It’s no secret that we already pay proportionately more than our southern counterparts because of various risk factors, lack of competition and transport costs – we pay more for construction, we pay more for insurance, for electricity, fuel and other goods and services – so it’s time to level the playing field and make insurance accessible in North Queensland, while fostering economic growth by making the region an attractive prospect for start-ups and investors” said Ms Coco.
“We support key recommendations in the report included the abolition of Stamp Duty on domestic insurance products in its entirety or, failing that, rebasing Stamp Duty so that it is calculated on the value of the assets insured instead of the premiums paid” she said.
“We will lobby for these types of solutions to be applied to commercial and farming insurance products and we have other policy proposals that warrant investigation.”
Townsville Chamber of Commerce President, Michele Falconieri, said he was pleased to join with the Hinchinbrook Chamber of Commerce as a single voice for businesses in Townsville and the surrounding regions to call on the State and Federal Governments to address the fundamental issue of insurance.
“The recent report published by the ACCC has confirmed that there has been a complete market failure in the insurance industry in North Queensland with insurers said to be running at losses of 13% over the past 12 years, while premiums being paid by businesses have continued to rise” said Mr Falconieri.
“Government legislation requires businesses to hold insurance policies, and now more and more insurers are expected to exit the marketplace as the ACCC report has demonstrated it is an unsustainable business model for Northern Australia” he said.
“When the insurance business in North Qld is running at a loss but premiums being paid have continued to rise and Stamp Duty and GST are factors of premiums, while it may not be the Government’s intention, the fact of the matter is they [the Government] might be the only party benefiting while Northern Australia becomes less attractive as a place to do business.”
“The united voice of the regional Chambers of Commerce are demanding that Government policy around insurance needs to be addressed.”
Hinchinbrook Chamber Management Committee Member, Kieran Volpe, said that another growing issue with insurance was market failure for certain industries.
“We know that pubs, hotels and caravan parks find it near impossible to get property insurance, with some in the region going without property insurance in its entirety” said Mr Volpe.
“This raises the potential for issues to arise in times of large-scale natural disasters such as cyclones … if a large pub is uninsured, and is severely damaged, who will pay for the clean-up and make-safe? Inevitably, it will land in the hands of local or state governments” he said.
“It also makes it harder for these types of businesses to sell, as any finance company will want the asset they are providing security against to be insured for loss or damage … you’ll find pubs will simply close if the owners cannot eventually sell, leading to a decline in business, especially in regional towns where pubs are often the social hub of the town.”
In the coming weeks, the respective Chambers of Commerce will be looking to meet with representatives at both levels of Government to discuss possible options and policies to ensure a viable, competitive insurance industry remains available to provide products for North Queensland businesses and remove impediments that discourage business growth in the regions.