Under-insurance in northern Australia is a significant and growing problem, with around 40 per cent of properties in northern WA carrying no cover whatever.
According to the Australian Competition and Consumer Commission, rates of non-insurance in the Northern Territory are 26 percent, and in North Queensland 17 percent.
In the final report from its Northern Australia insurance inquiry, the ACCC says that as well as being affected by more severe and frequent weather events, Tope End insurance costs are also being inflated by poor profitability, a lack of competition, and low populations (and thus potential premium pools).
Its report has recommended reforms to land use planning and building standards, among other things, to reduce risk and costs in the longer term.
It has also suggested the insurance industry work with governments to identify specific public mitigation works that could be undertaken.
Building homes to more resilient standards, and making it easier for insurers to recognise resilient homes, could help reduce future premiums, the report says.
“However, current regulatory settings are not driving the development of more resilient buildings in higher risk areas,” it says.
The ACCC suggests the remit of the Australian Building Codes Board be expanded to enable it to directly consider property protection and resilience measures when developing building standards [and] that insurers work with Standards Australia to develop voluntary standards for even more resilient homes and for mitigation works on existing properties.
“State and territory governments should consider how their respective planning frameworks could allow planners to explicitly take into account insurance affordability and availability under existing planning objectives,” the report says.
The ACCC also suggests looking at the potential for co-funding arrangements between governments and the insurance industry to develop data that can meet both planning and insurance requirements.