This week has seen some major announcements about the federally backed reinsurance pool for cyclone and flood related damage. The reinsurance pool for cyclone and flood related damage was one of Townsville Chamber’s recommendations to Treasury in January 2021 to deal with the crippling effect of insurance prices in Northern Australia. There has been considerable work done on the design of the reinsurance pool since its announcement in May 2021, and the latest announcement, if realised, will make a huge difference to the development of Northern Australia.

The Townsville Chamber would like to acknowledge the tireless volunteer work that has gone into working on the issue of unaffordable or unattainable insurance in Northern Australia. Townsville Chamber was privileged to work with seasoned insurance campaigner Margaret Shaw OAM whose passion and knowledge has been evident for over 10 years. Townsville Chamber would also like to mention industry experts Ron Bellert and Adriano Bellocchi who have given constant and constructive industry feedback, as well as fellow Treasury advisory group members Jonathan Pavetto, Sally Mlikota, Kevin Byrne and John Dervaney.

While all the feedback hasn’t been implemented in its entirety, this is seen as a solid starting point.

If the modelling announced by the government is correct, policies with the most acute cost pressures are expected to benefit with savings of up to 46% for homeowners, up to 58% for strata properties, and up to 34% for small to medium businesses.

Last year, the Townsville Chamber of Commerce worked with Mat Kelly from Regional Economic Advisory to do some modelling on what reductions in insurance premiums in Townsville would mean for our local economy. It should be noted that these findings are conservative, but even still, the size of the economic impact for our local region would be substantial. The report highlighted that if residential properties saw a reduction of 50%, and just two thirds of those savings were spent locally then annually there would be approximately $222m in economic output, a contribution of $118m to Gross Regional Product, over $60m in income and salaries for local workers and approximately 949 ongoing fulltime jobs created (directly, and indirectly though multiplier effects). These numbers did not include reductions in small business premiums, if they did, we would see even greater benefits.

This is not to mention the economic flow on from new housing developments including unit style developments that have been under pressure from rising insurance availability and costs.

While the insurance industry will need time to start the process of adjusting their pricing structures, yesterday’s announcement is seen as a major step forward to start the process of putting downward pressure on the cost of insurance in Northern Australia. For the reinsurance pool to have the largest effect, it will require more companies to re-enter the market and create competition.

You can read more of Townsville Chamber’s submissions on insurance HERE and you can also download the Townsville Economic Review 2021- 22 that highlights the savings from reductions in Insurance costs HERE or just subscribe to our podcast for updates.

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This legislation is due to be debated and implemented in the next two weeks as Federal Parliament sits.