ADAM STEPHEN:
Assistant Treasurer, thanks for joining us.
STEPHEN JONES:
Good to be with you.
STEPHEN:
Could you just clear up here, because this cyclonic event, because Tropical Cyclone Jasper crossed the coast on Wednesday and the way that the pool is currently designed, there's about a 48 hours window, is it that insurers would be covered for damage but beyond that they're not covered?
JONES:
Yeah, look, I'll answer that directly, but can I just clarify some stuff, because there's been a fair bit of confusion and stuff getting around over the last week.
STEPHEN:
Please do.
JONES:
And the last thing we want to do is have people who are already stressed, they've got property damage, they're looking like they've lost their livelihoods. The reinsurance pool has no impact on the legal relationship between you and your insurer, if your insurance policy covered flood and storm and damage last week, it covers it next week and you've got a valid claim. The reinsurance pool is, if you like, a contract between the insurers and the government owned entity which runs the pool. It's an insurance contract, as you said in your introduction, which covers the insurers for some, but not all of the losses that they may occur. And when we were legislating the stuff that was designed by the former government, we picked up the definition that they had of what a cyclone was, which is the Bureau of Meteorology tells us when a cyclone hits land and when it concludes and 48 hours after the conclusion of the cyclone, all defined by the Bureau of Meteorology, not by us, by them, is when the liability from the pool to the individual insurers kicks in and expires. But it has no direct impact on households ability to claim from their policies.
STEPHEN:
Not for this event, but potentially it's going to drive insurance premiums higher. If this ends up being a massive cost to insurers, which they're predicting it will be, they're saying they'll have to pass those costs on if they're not covered by the reinsurance pool. So, is it the case currently, with the way that the legislation works, that they will be up for most of the damage here, given most of the flooding occurred beyond 48 hours after the crossing of Cyclone Jasper?
JONES:
Well, there is a little bit of mischief going on by some of the insurers here, and I'm calling it out. They knew exactly what they signed up to, and it's not like this is the only reinsurance that they have. They go into the global reinsurance markets just as they did before the pool was legislated. So, no change in respect of that. Yes, we'll be bringing down the overall cost of reinsurance, but we're not wiping out all the reinsurance costs for every class of hazard that these insurers are offering for. So, there's a bit of mischief going on on behalf of the companies who, fair enough, I don't blame them, they're trying to campaign for a change in the design of the pool. But, this is probably a pretty insensitive moment for them to be doing that. They know exactly what they signed up to. Insurance is their business. They signed up to this, they know exactly what their liability is and what it isn't. And I'd suggest to a couple of them who are out there campaigning for a change in the design of the legislation, this is a pretty insensitive time to be doing it and creating a whole heap of confusion when households and businesses up in north Queensland are trying to put their lives back together again. Let's sort out the mess that is immediately before us, which is the flood and the cyclone damage, and we can get back down the road to any changes if necessary, to the pool and the arrangements. But let's just deal with the immediate crisis before us, which is cleaning up after this catastrophic event.
STEPHEN:
Hearing here from Assistant Treasurer Stephen Jones. To that end, we do know many properties that have been inundated were uninsured and we've heard that from the people who have had their lives ruined. Today, your government announced grants of up to $50,000 for people with no insurance. What can that be used for?
JONES:
This is to help them restore their properties and their businesses so that they can get their lives back together again. It's an interim measure. We know there's been some devastating damage up there and it probably wouldn't put them in the same position as they were in if they'd had a full insurance policy. But it's an interim measure and we know that we've got a fair bit of work to do around insurance and disaster resilience measures up there in north Queensland. But I think people will look at this and they say, well, that's a welcome intervention by the government, the Albanese government, working very closely with the Queensland government to ensure we have a partnership to get all of this stuff sorted. We know there is a whole heap of people who, for a whole bunch of reasons, have been unable to get insurance up there. We don't want to leave anyone behind.
STEPHEN:
And just back to the reinsurance. But my final question, you are reviewing it at the moment, so what might we expect could come from the review? Could it be that that 48 hours period is potentially extended?
JONES:
You know what? I just don't want to pre-empt where we might go with this. There's a whole heap of questions we've got to get to in the insurance area. I took a delegation of insurers up to London and Europe at mid year to look at what was the big international effects and talking to the international reinsurers up there and what the clear message I came away with is that climate change is now feeding into insurance premiums. We’ve got about five years to firm up our infrastructure, change our building code, stop building suburbs and floodplains, stop doing dumb things effectively and to try and build stronger and better resilience and to look at some changes in the insurance area as well. We haven't got forever. So, the review of the reinsurance pool will look at some of the issues, no doubt take some learnings out of this, but we've got a whole bunch of big issues that we've got to look at around the impact of changing the impact of severe weather events which are being driven by climate change and affecting nowhere more in Australia than in north Queensland.
STEPHEN:
Assistant Treasurer, thanks for joining us.
JONES.
Good to be with you.