Property owners in Queensland’s cyclone region are facing insurance premiums up to 12 times higher than those living near the southern border, the North Queensland Strata Action Group has told a Senate inquiry.
This disparity is exacerbated by inadequate support from insurers as the frequency and severity of natural disasters intensify.
Since 2022, insurance premiums have more than tripled, significantly contributing to the cost-of-living crisis.
Some residents are paying high fees based on risks that may not apply to their specific community because the risk is assessed and prices set for the entire region. For instance, Mackay has not experienced a cyclone since 1918, but property owners still pay for that risk.
In its submission, the Queensland Local Government Association pointed out that the federal government has made significant investments in disaster mitigation in the region. However, homeowners are still being charged based on the risk profile assessed before that work was done.
Councillors have also raised concerns about the high costs of rebuilding with insurance contractors compared to self-insured flood victims in regional NSW, who have reported lower repair costs.
In response, insurers such as Suncorp, have proposed a four-point plan to address the impact of natural disasters in the region.
Their recommendations include increased government funding for infrastructure, grants for property owners, better urban planning, and lowering taxes on insurance-owning property owners.
According to the Insurance Council of Australia, the cyclone that struck south-east Queensland in 2022 cost insurers $2.3 billion out of a total $7.7 billion damage bill.
In comparison, the 2022 flooding in NSW that same year cost insurers $5.5 billion in claims, making it the country’s most expensive natural disaster to date.
Historical data shows that weather events of the same severity would result in even higher costs today.
For instance, Cyclone Dinah (1967), would cause an estimated $6.19 billion in damage today, while Cyclone Wanda (1974) would cause $5.26 billion in damage.
In comparison, the damage bill from the 2019/20 Black Summer bushfires across four states was $2.3 billion.
In February this year, the NSW Reconstruction Authority estimated that natural disasters could cost the state $9 billion annually by 2060 unless action is taken to mitigate climate change and population growth.
The committee is due to report to the Senate on Nov. 19.
