Australia government drops state reinsurer plans
The Insurance Council of Australia (ICA) has welcomed government plans to drop the creation of a state-backed reinsurer.
The government has sensibly decided against intervening in the insurance market in northern Australia, ruling out a cyclone mutual and an insurance pool, said ICA CEO Rob Whelan.
“Such intervention would have had little impact on premiums, would have undermined risk-based pricing in a properly functioning market, and would have exposed taxpayers to potentially billions of dollars of losses,” Whelan explained.
The Australian government had earlier discussed the creation of a mutual fund that could provide residents of the state of Queensland with compulsory basic cyclone cover, in combination with private insurance for other natural disasters, according to an April 24 report by The Guardian. The plans were designed in the wake of Cyclone Debbie, which resulted in claims in excess of $0.77 billion.
The proposal would see a government mutual fund providing residents in north Queensland with compulsory basic cyclone insurance which could combine with private insurance for other events such as floods and bushfires.
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