insurance tragicomedy continues to run

The Financial Services Royal Commission has put out a discussion paper with a request for information: Natural Disaster Insurance. This includes some discussion of insurance in Northern Australia.

While the Royal Commission is certain to provide better theatre it is the ACCC inquiry which remains the most promising. The ACCC has also recently published an update report following public submissions. The list of public submissions received is rather long. Mostly more anecdotal ‘war stories’ with limited substantive contribution.

There are a couple of items of interest on a quick first perusal of the ACCC update:

ACCC preliminary 2ACCC preliminary 1

First. The order in both does actually represent relative cyclone risk despite common misconceptions and media misrepresentations in FNQ. It is North West highest, then Queensland, then NT. Could be better represented on a log scale though.

A question though is trend differences between houses and strata properties? There are some differences between these classes of insurance but they are unrelated to geographic risk.

The big Australian insurers (IAG and Suncorp) report these classes separately in their results. Strata is in commercial distributed through brokers. House and contents is its own division.

I wonder how many unit owners are aware that it is the body corporate managers who take the biggest slice of the 20% commission (typically 15% for large body corporate managers) and not the broker? My experience is almost none.

The relative difference here in premiums between the classes and regions appears to have shifted for strata since the previous report by the Australian Government Actuary. There is also an apparent anomaly between figure 5.6 and figure 5.8 within this report for North Queensland strata?

Comparisons and numbers here should also be another reminder to our elected political representatives that insurance stamp duty is a fiscal transfer from North Queensland to SEQ.

I have tried to aggregate links to the trail of successive inquiries at Insurance.

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