Subsidised insurance in northern Australia could save homeowners thousands
Homeowners in northern Australia could see home insurance discounts of up to 46% after the federal government's cyclone reinsurance pool passed through the Senate last week.
This will come as welcome relief to residents who face premiums that are on average double those in the rest of the nation, according to the Australian Competition and Consumer Commission (ACCC).
In its 2019 report on the state of insurance in the north, the consumer watchdog found even more unsustainable premiums in areas most impacted by cyclones. For example, homeowners in Western Australia's Port Hedland face an average annual bill of $5256 compared to the $1400 paid outside northern Australia.
As a result, the ACCC found 20% of households were going without insurance, almost doubling that of the rest of the country.
The reinsurance pool, which is set to roll out from July 1, also promises insurance discounts up to 58% for strata properties and 34% for small businesses, amounting to premium cuts on more than 880,000 policies.
How does reinsurance work?
It effectively provides government backing to insure the insurers against potentially crippling mass claim payouts in areas prone to cyclones. The expectation is savings will be passed onto insurance customers, although there's currently no guide on how this will be enforced.
Precisely how the government's anticipated premium cuts have been calculated also remains unclear.
"Until we have seen the pool's proposed pricing rates we are not in a position to determine the size of the anticipated savings," says RACQ CEO David Carter.
"We also need to settle on the operational aspects of the pool - how insurers will recover costs, how premiums will be monitored and how insurers will do business with the pool's manager in the aftermath of a cyclone."
Carter also suggests the scope of the coverage - which only considers damage done within 48 hours of a cyclone and doesn't include motor insurance - may limit potential savings.
While the Greens lobbied for the expansion of the reinsurance pool to include flood-affected communities, for now, the scheme won't apply to people in these situations.
Insurance Council of Australia CEO Andrew Hall says a reinsurance pool "is just one piece of the puzzle".
He welcomed the Federal Budget announcement of a further $150 million in disaster recovery funding for those affected by this year's floods, but also called for more proactive measures.
"In the lead up to the election in coming weeks, it is incumbent upon the government to not only assist with recovery, but announce further investments to better protect communities from the impacts of extreme weather," Hall says.
How to access flood-related support in NSW and QLD right now
Figuring out your finances in the aftermath of a disaster is just one step in a complex and often traumatic recovery journey. Government support payments for those impacted by the recent floods might seem minuscule in the face of the losses experienced by many, but they can at least offer some short-term relief.
The Disaster Recovery Allowance provides a maximum of 13 weeks income support for people whose earnings have been impacted by the floods. This is only accessible to people who, in that time, earnt less each week than the average Australian weekly income of $1737.10.
The fortnightly payments run in line with the rates for JobSeeker (upper limits range from $585.30 to $880.20), which vary based on your age, dependents, and relationship status.
The Disaster Recovery Payment is a one-off payment of $1000 per adult and $400 per child available to those seriously impacted by the floods. Applications for these payments will remain open until September 29.
Both these schemes are claimable via Centrelink when linked online through MyGov. If you're new to either system they can be set up online, but there is a national emergency information phone line on 180 22 66 if you're struggling with the process.
There are additional disaster grants and temporary housing support packages for residents in both states, but these are subject to further eligibility requirements and specific to certain regions facing hardship right now. Head to the NSW flood financial support hub or the southeast Queensland flood emergency page to investigate what further financial support you might qualify for.
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