The flooding catastrophe has underscored the importance of abolishing state taxes and levies that increase the cost of cover and contribute to affordability problems, Insurance Council of Australia (ICA) President Nick Hawkins has told the industry’s annual dinner.
“A by-product of affordability is underinsurance. Again, we saw the consequences of this in recent events,” he said.
“Abolishing all state taxes on insurance would reduce the cost of home and content insurance cover across Australia by 10-15%. Here in NSW, our largest and most populous state, the reduction could be as much as 30%.”
Removing the taxes could help close the gap on underinsurance in many key areas, and help make insurance affordable for those who are financially vulnerable, he told the dinner, held in Sydney after a two-year break during the pandemic.
Mr Hawkins says general insurance has a critical role in the economy, acting as the country’s shock absorbers and as financial first responders for communities devastated by catastrophes.
“That financial contribution, and our experience in rebuilding communities, gives us permission to have conversations about the policy settings and targeted investment in mitigation needed to create a more resilient Australia,” he said.
Mr Hawkins says ICA’s Business Advisory Council is also working to find sector-based solutions on affordability and availability problems in areas such as public liability, professional indemnity and other commercial lines. The council was recommended in a review completed by John Trowbridge.
“We should be solving these problems as an industry, to avoid the sort of government intervention we have already seen with the cyclone reinsurance pool, [lenders’ mortgage insurance] and calls for a flood pool,” Mr Hawkins said.
ICA CEO Andrew Hall told the dinner that insurers welcome the Labor Government’s commitment of $200 million a year for resilience and mitigation, and that it’s continuing to work with the NSW government on the reconstruction framework for the flood-hit Northern Rivers region.
“Other key focus areas for our industry include the cyclone reinsurance pool, which still has some way to go for finalisation,” he said.
Mr Hall also said there is now a greater understanding of the hardening market for cyber cover and the need for the right policy settings to give industry greater confidence in participating in the market.
ICA today announced that Swiss Re Head of Australia and New Zealand Sharon Ooi has been appointed to its board.
Ms Ooi’s previous roles include Head of Property and Casualty Underwriting, Asia, Australia and New Zealand, based in Singapore.
“The board has a good mix of general and speciality insurers as well as our industry’s key reinsurers, providing a range of perspectives on the issues we face,” Mr Hawkins said.
“We look forward to drawing on Sharon’s broad knowledge of reinsurance and financial services as well as her regulatory experience in Singapore.”
