Analysis by Lateral Economics for the Insurance Council of Australia (ICA) finds that the Tasmanian government’s proposed state‑owned insurer, TasInsure, would not address the underlying drivers of insurance costs and would expose Tasmanian taxpayers to significant financial losses. The analysis estimates establishment costs of about $150 million and prudential capital requirements of up to $510 million, and projects annual operating deficits of up to $13 million. On the report’s assumptions, those deficits would draw down the Motor Accidents Insurance Board’s available reserves within about 15 years, after which additional taxpayer funding would be required to maintain the scheme.
The ICA positions the findings within broader insurance affordability pressures in Tasmania, where premiums are being affected by higher catastrophe exposure and elevated construction costs. The council cites a combination of more frequent and severe weather‑related losses and persistent inflation in building and reconstruction as factors contributing to higher claim costs. Tasmania’s risk profile is described as comparatively exposed, with about 98% of the state classified as bushfire‑prone and property values estimated at roughly 278% of state output, the highest such ratio in Australia. The ICA argues that these characteristics support a focus on risk reduction and tax settings rather than transferring underwriting risk from private capital to the state. ICA CEO Andrew Hall said the design of the policy response is central to the outcome for households and businesses. “The question isn’t whether action is needed; it’s about finding the most effective solutions that will genuinely help Tasmanians over the long term,” Hall said.
In place of a broad state‑owned general insurer, the ICA has set out a suite of reforms it says would put direct downward pressure on premiums while leaving the private market in place. The council is calling for changes to about $260 million in annual state insurance taxes, which it says add about 21% to household premiums and up to 48% for businesses. It is also urging further investment in physical risk mitigation in partnership with the federal government under the $1 billion Disaster Ready Fund, with a focus on flood and bushfire projects in higher‑risk communities.
Hall cited the Launceston flood levee as an example of mitigation that has influenced loss outcomes and pricing. He said the levee “prevented $216 million in losses during the 2016 floods and generates annual premium savings of up to $14 million.” He added: “This is why we need solutions that reduce risk, not just transfer it. The Lateral Economics analysis shows TasInsure would expose taxpayers to losses exceeding hundreds of millions of dollars, while doing nothing to address the underlying risk.”
The ICA is also calling for a review of civil liability settings, with the objective of improving the availability and affordability of cover for small businesses, community organisations, and not‑for‑profit entities. “Instead, let’s invest in resilience that delivers ten-fold returns, remove unfair state taxes, and modernise laws that are costing small businesses. The insurance industry is ready to work constructively with the government and community on solutions that will genuinely help Tasmanian families and businesses afford insurance over the long term,” Hall said.
The Tasmanian government is continuing development work on TasInsure following public consultation on a discussion paper and preliminary draft bill released in November 2025. Feedback on those documents closed on Jan. 9, 2026, with 18 submissions lodged. Premier Jeremy Rockliff has appointed financial services and insurance specialist John Trowbridge to advise on the scheme’s development, operating arrangements, and governance.
The government links the proposal to broader national disaster activity and its flow‑through to premium levels. “Cyclone Koji has battered northern Queensland, fire has ravaged Victoria, and we are already seeing peak insurance bodies warn that this will impact premiums. We know the insurance market is broken, and this again highlights the need for a Tasmanian solution. We are getting on with the job of establishing TasInsure to deliver cheaper and fairer insurance for Tasmanians. For too long, Tasmanians have been underinsured, unable to get insurance or paying the price of disasters on the mainland. Our Liberal Government is getting on with the job of delivering cheaper, fairer insurance for Tasmania,” Rockliff said.
When the discussion paper and draft bill were released under the banner “Cheaper. Fairer. Ours,” Rockliff said: “TasInsure will be affordable, locally owned, and built for Tasmanians,” and stated that “in the past few years, insurance premiums have skyrocketed.” The government has indicated TasInsure is intended to save households about $250 a year and small businesses “thousands per year,” with an emphasis on sectors such as cafes, restaurants, wineries, breweries, and distilleries.
The National Insurance Brokers Association (NIBA) has also provided a detailed submission on the TasInsure proposal. NIBA recognises affordability pressures but focuses on scheme design, distribution, and consumer protection issues. The association’s submission highlights access to professional advice as a key consideration. It notes that neither the discussion paper nor the draft bill explains how Tasmanian consumers would access the broking profession when purchasing TasInsure products and describes this as “a critical omission.” NIBA refers to evidence that broker clients are twice as likely to be fully covered for their claims compared with direct buyers.
NIBA states that if TasInsure products are not available through brokers, small businesses, community organisations, and regional customers with more complex risk profiles may miss out on advice, claims advocacy, and support for decision‑making. The submission also identifies completion of Fire Services Levy reform as “the most direct mechanism for premium relief,” saying the levy adds about 28% to business insurance premiums and that abolishing it would produce immediate, quantifiable savings without the establishment and operational risks associated with a state‑owned insurer. On scheme structure, NIBA recommends TasInsure operate as a last‑resort model targeted at genuine market failures rather than competing on price with private insurers. It urges caution regarding any inclusion of workers’ compensation, citing financial distress experienced in some other state‑based statutory classes.
From a consumer protection perspective, NIBA recommends TasInsure be required to join the Australian Financial Complaints Authority (AFCA) to ensure Tasmanian policyholders have access to free, independent external dispute resolution on the same basis as customers of private insurers. It also calls for the release of comprehensive financial modelling, including stress‑testing under major‑loss scenarios, before legislation is finalised. For insurance professionals, the current debate sets out two broad approaches to affordability in Tasmania: creation of a state‑owned insurer with explicit fiscal backing, and a set of reforms focused on tax policy, mitigation investment, liability settings, and distribution channels. Industry bodies have indicated they will continue to engage with the government as the TasInsure proposal and related reforms are considered.
