Release of the Committee Report into the House Economics Inquiry into insurers’ responses to 2022 major floods claims
Opposition Members of the House Standing Committee on Economics have delivered a dissenting report, outlining key concerns with the recommendations put forward by the Committee and concerns on future affordability, risk mitigation and regulation.
Deputy Chair, Garth Hamilton, said the final report put forward recommendations that put at risk the sustainability of the Australian insurance landscape, and step-toed toward greater government intervention.
At the outset the Opposition had three main goals, ensuring insurance companies did the right thing, reducing risk through mitigation and planning and achieving more affordable insurance.
“The Opposition members are deeply concerned about proposals in the report, in particular Recommendation 70 which seeks greater government intervention in the insurance market with adverse impacts on the cost of insurance.
“The implications this could have in Australia, we have already seen it play out in California’s insurance market where more than half of the firms offering insurance exited the market in part because of increased regulatory intervention and competing with government,” Mr Hamilton said.
“A consequence of this interventionist approach has resulted in less competition, lower availability of insurance offering and poorly designed regulatory settings that do not enable insurers to accurately incorporate risk into premiums,” Mr Hamilton said.
“The report recommends more red tape, more government intervention and is weak on mitigation and flood insurance affordability,” Mr Hamilton said.
The process of the inquiry provided information on issues related to the flood insurance sector, the 2022 flood response by insurers, planning, affordability and regulation.
Mr Hamilton said Opposition members strongly welcomed the aspects of the report in relation to planning, flood mapping and the role of the state, territory and local governments.
He said the Opposition wanted to see more on transparency of emergency funds and while welcoming greater efforts on flood mitigation, they wanted the committee to go further.
Mr Hamilton said the report neglected a key driver of the rising cost of insurance, the impact of Labor’s high inflation.
“High inflation is having a significant impact on insurance costs, and the broader industry. The report is using insurance firms as a scapegoat for the Labor governments failure to tackle inflation, a result of higher inflation, claims cost more and premiums rise,” Mr Hamilton said.
“Under Labor, insurance prices are up approximately 16.2 per cent over the preceding 12 months (ranging from 16.6 per cent to 17.3 per cent) according to the Australian Bureau of Statistics[1],” said Mr Hamilton.
The full report is available at https://www.aph.gov.au/floodinsurance
[1] Annual living cost increase highest for Employee households | Australian Bureau of Statistics (abs.gov.au)
