Letter
Pool the national risk
Ross Gittins’ suggestion for some form of a regional diaspora for flood-prone centres like Lismore might be technically correct. The Insurance Council of Australia wants $30 billion spent on mitigation. Even if both were immediately implemented by government, they are still long-term programs. Property owners need premium relief now.
The unsustainably punitive premiums reflect the insurance industry’s targeting large regions with small populations to bear the brunt of costs, a methodology dictated to us by international reinsurers.
The federal government Australian Reinsurance Pool Corporation originally established to provide reinsurance for terrorism events post 9-11 was expanded to pick up cyclone events. It’s basically a $10 billion guarantee should the pool be exhausted by any one event.
This entity needs to be remodelled into a national catastrophic reinsurance pool that comes into play be it cyclone, flood, bushfire, earthquake, 9/11 terrorism or even a major man-made conflagration like the 2020 Beirut Port explosion.
The cost of this reinsurance premium can be spread across the country’s insurance pool. For transparency’s sake, the premium component should be disclosed on each insurance policy invoice. That will give us an interim breathing space while necessary billion-dollar mitigation strategies can be completed.
— John Devaney from Townsville