Queensland is likely one of the most challenging states for insurers and brokers because of its high exposure to cyclones and floods. As a result, some stakeholders say insurance premiums in Queensland are the most unaffordable in the country. This week, the Australian Consumers Insurance Lobby (ACIL), called on the state’s government to ease this affordability issue – and boost disaster resilience funding – by redirecting stamp duty collected on the GST component of premiums.
“Queensland stands out as the most unaffordable state for insurance,” said Tyrone Shandiman (pictured left), who chairs the broker led advocacy group. “That’s why our focus is here – it’s where the need is greatest.”
In a letter to Treasurer David Janetzki (pictured right), ACIL said “Queensland is uniquely positioned to lead” on this issue because it’s the state with both the highest insurance premiums and the highest stamp duty revenue.
The letter said over the next five years, Queensland is projected to collect more than $10 billion in insurance stamp duty. “Of this, an estimated $912 million will come from applying stamp duty to the GST component of premiums – effectively a tax on a tax.”
Shandiman said this is contributing to extreme affordability challenges for property owners.
“Redirecting that revenue to fund risk reduction would send a powerful signal that the Government is serious about cost-of-living relief and disaster resilience,” he said.
Brokers in Queensland say some commercial property owners have very few, if any, insurance options. “In the worst cases, brokers are forced to look offshore to places like Lloyd’s of London,” said ACIL’s chair.
Shandiman said businesses are being put at risk and face decisions between self-insuring or taking on unaffordable excesses.
This also brings serious challenges for brokers.
“For brokers, it’s not only about finding cover - it’s about dealing with what can often be an emotive issue for a frustrated or distressed client who feels let down by the system,” he said. “I don’t know any brokers who want premiums to be high or unaffordable.”
In this situation, Shandiman said, brokers can’t find clients a “best outcome.” When premium prices are out of reach, he said, the relationship with clients is less about service, advice and loyalty and more about the bottom line.
“Clients will shop around and move for even small savings, because, for some, that difference can determine whether they remain profitable or not,” said Shandiman.
ACIL hopes the government’s sense of fairness will move it to act.
“We believe the Queensland Government recognises there’s a serious problem with insurance affordability – it’s the cost of fixing it that creates hesitation,” said Shandiman. “But fairness has to guide the response.”
He said taxing the GST on premiums is effectively taxing a tax and is “fundamentally unfair.” “So let’s start there - redirect that revenue into cyclone and other resilience measures,” said Shandiman. “It’s a practical first step that can make a real difference.”
The stamp duty tax on insurance premiums is regarded by the insurance industry as a national issue. “No state has committed to abolishing stamp duty on insurance yet,” said Shandiman.
Earlier this month, Tasmania’s government announced plans to launch a state run insurer, TasInsure, in response to insurance affordability and availability issues. In response, some industry stakeholders pointed to abolishing the taxes on premiums as an alternative option.
The Insurance Council of Australia (ICA) said “the most immediate way” the next state government can improve insurance affordability would be to abolish stamp duty and the Fire Services Levy (FSL) on insurance products.
In Queensland, ACIL would like these taxes redirected.
“ACIL has again urged the Government to commit $100 million per annum specifically for cyclone resilience measures in North Queensland, where the insurance burden is most extreme,” said Shandiman. “The funding could support roof strengthening, roof maintenance, debris management, and securing outdoor structures in high-risk areas.”
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