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:
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.
The question a financial and economic wonk wants answered though is why these were so significantly different between houses and strata properties? There are 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?
The relative geographic difference here in premiums between the classes has changed quite significantly since the previous reports by the Australian Government Actuary.
I have tried to aggregate links to the trail of successive inquiries at Insurance.