Residents in areas like Darwin have reported significant hikes in their home and contents insurance premiums. For instance, Matt Hoogland, a homeowner in Rapid Creek, noted that his insurance costs have increased by about two-thirds since 2021, despite not making any claims. Such experiences are becoming increasingly common among property owners in the region.
The Australian Competition and Consumer Commission (ACCC) highlighted that insurance in Northern Australia remains considerably more expensive compared to the rest of the country. In 2023, the median home and contents premium in the Northern Territory increased by 11%, while strata insurance premiums rose by 7%. These figures underscore the ongoing financial strain on homeowners in the area.
The cyclone reinsurance pool was designed to lower insurance premiums by reducing the cost of reinsurance for insurers covering cyclone-related risks. However, the ACCC's data indicates that while some consumers have benefited from reduced premiums, these savings have been offset by factors such as a hardening global reinsurance market, extreme weather events, and rising costs of building materials and labor.
Consumer advocacy groups have called for a reassessment of the reinsurance pool's funding structure to ensure more equitable distribution of benefits. Tyrone Shandiman, chair of the Australian Consumers Insurance Lobby, suggested that the current structure places a disproportionate burden on Northern Australia policyholders, as they subsidize coverage for other regions with historical cyclone activity.
As the frequency and intensity of natural disasters continue to rise, it is imperative for both the government and the insurance industry to collaborate on solutions that ensure affordable and accessible insurance coverage for all Australians, particularly those in high-risk areas.
