Fairfax Media Network

Weather News

MP touts ways to ease disaster insurance costs

By Sharnie Kim, Monday February 11, 2013 - 15:16 EDT

Far north Queensland MP Warren Entsch says the Federal Government should underwrite disaster insurance to help bring down high premium costs in northern Australia.

It is one of a number of proposals in Mr Entsch's submission to a Coalition policy committee formed to tackle the issue.

Mr Entsch, the Member for Leichhardt, says it would require a pool of money to help discount premiums and meet potential shortfalls in claim settlements.

"We need to start looking at governments looking at underwriting disaster insurance," he said.

"They already have done it after the floods in Thailand, after the tsunami in Japan and the earthquakes in New Zealand.

"All those governments have done it and in every one of those cases small business and residential insurance is now affordable."

Mr Entsch says the Federal Government should pay the first $500 million in damages in the event of a natural disaster.

He says the money would be raised through a levy and would help insurance companies negotiate a cheaper deal with re-insurers.

"They need to take off the compulsion in relation to flood insurance, particularly in areas where there is no risk of flooding," he said.

"They also need to get governments involved in the catastrophe reinsurance market.

"In northern Australia we pay an extra $30,000-$40,000 a year to build a house because we build to cyclone specifications - that is not taken into consideration."

Mr Entsch says insurance premiums could be halved if the Federal Government amended its Strata Act.

He says body corporates are facing bankruptcy because their insurance premiums are calculated based on the cost to replace a building and there should be an option to insure the building for market value.

"By adding in four words, instead of just a compulsion to insure for full replacement value, if we were to add in there 'or market value' that would make a huge difference," he said.

"That would drop the value of these premiums significantly."


© ABC 2013

More breaking news

ABC News
Sydney Morning Herald
National Nine News
News Limited

Display Your Local Weather

Weather News

A country of contrasts

17:33 EDT

Australia lived up to it's name today, with a vast contrast in conditions across the states.

Townsville, Burdekin now drought declared, Queensland Agriculture Minister Bill Byrne says

16:27 EDT

Another seven Queensland regions have been drought declared, including Townsville and the Burdekin region, which are in the usually wet areas of north Queensland.

American Air Force personnel celebrate a toasty Thanksgiving stationed in the Pilbara

14:21 EDT

They may be far from home, but a group of Americans have gathered in Western Australia's Pilbara region to celebrate Thanksgiving.