A promise to halve the rising cost of home and condominium insurance in Australia’s north will not be kept, the new federal government has said.
- The Labor Federal Government has released the CRP modelling, which will be launched tomorrow
- He accused the former government of misleading voters with false promises of 46% savings on premiums
- Stephen Jones said the real savings would be around 19% for owners, with some premiums being more expensive.
The Cyclone Reinsurance Pool (CRP) for residences, strata and small businesses in northern Australia, which was due to be in place from July 1, was the $10 billion brainchild of the Morrison government.
It was designed to correct a market failure that has seen homeowners in northern Australia pay premiums up to 20 times the cost of insuring a home in Sydney or Melbourne.
During this year’s federal election campaign, the former government said the reinsurance pool would provide savings of up to 46% for homeowners and 58% for condominiums.
But in releasing the modeling in Townsville today, new deputy treasurer Stephen Jones said the previous government had misled voters.
“There will be a reduction in premiums, but it will not be anything of the order of the [roughly] 50% halving of what the previous government promised,” Mr Jones said.
The cost of some premiums will increase, warns the government
The reinsurance pool is designed to cover 880,000 policies nationwide, but the deputy treasurer warned that not all policyholders will see the same reductions.
“There will be people in certain low-risk areas for whom the premiums will go up,” Mr Jones said.
“We don’t know exactly [by how much] Again.”
The Deputy Treasurer blamed the discrepancy squarely on the former government and said the modeling should have been released before the election.
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Australian Consumers Insurance Lobby chair Margaret Shaw has spent the past decade campaigning for insurance savings in North Queensland.
“I want to know if the insurance companies got the proper ratings,” she said.
While the pool is due to come into effect tomorrow, Ms Shaw does not expect the benefits to trickle down for some time.
“It will be implemented by insurance companies over the next 12 months as their reinsurance contracts are renewed,” she said.
The assistant treasurer warned that it could take even longer for the savings to reach households.
“It should be no later than an insurance policy written for calendar year 2025,” Mr Jones said.
“It could be sooner than that. These are evolving policies.”
LNP member from Herbert headquarters in North Queensland, Philip Thompson, called on insurers to implement the changes as soon as possible.
“There would always have been an implementation period, but what we’re hearing from insurers about delays is ridiculous,” Mr Thompson said.
Insurance companies have until the end of 2024 to join the pool, membership of which is mandatory.
The new government has said it hopes the introduction of the pool will bring back insurance companies that had previously walked away from the market.