The Government is today releasing a report by the Australian Government Actuary into strata title insurance prices in North Queensland.
The report found that strata title insurance premium rates in major cities including Brisbane, Gold Coast, Sydney, Melbourne and Adelaide are much lower than premium rates in North Queensland.
According to the Australian Government Actuary, the variation in premium rates can mostly be explained by differences in recent claims experience.
During the eight-year period of investigation, claims costs in North Queensland were both higher and more volatile than those in other east coast centres, which are not exposed to the same high level of cyclone risk.
The report also identifies that there are different competitive dynamics in the North Queensland insurance market in comparison to other insurance markets across Australia.
The market in North Queensland is less competitive, with many insurers choosing to have little or no exposure in the North Queensland market. Other insurers with a market presence are not competing vigorously to grow or retain their market share.
The Government is already progressing a number of measures to enhance competition in the North Queensland insurance market and is seeking feedback on a range of options in the discussion paper ‘Addressing the high cost of home and strata title insurance in North Queensland’.
The Australian Government Actuary will now commence an additional report into residential building and contents insurance in North Queensland.
The Australian Government Actuary will complete this report by 31 October 2014.