The Tasmanian Liberal Party has unveiled a policy to establish a new state-owned general insurer, TasInsure, should it return to government following the upcoming state election.
The proposed entity would be built on the existing Motor Accidents Insurance Board (MAIB) structure and would provide a suite of general insurance products for households, small businesses, and community groups.
Premier Jeremy Rockliff announced the plan as a response to rising insurance costs, which he said had increased 35% in two years across the state.
The Tasmanian Liberals estimate that a publicly operated insurer could deliver average annual savings of $250 to households and reduce premiums for small enterprises by 20%.
“Any profits that will be made by TasInsure will be reinvested to ensure that we keep premiums low in Tasmania,” he said, as reported by ABC.
He attributed the state’s rising premiums to external factors, including weather-related disasters on the mainland, arguing that a locally based insurer could offer more stable pricing and greater responsiveness to regional needs.
The policy has gained support from some sectors of the Tasmanian business community.
The Tasmanian Chamber of Commerce and Industry (TCCI) and the Tasmanian Hospitality Association (THA) both said insurance affordability is a major concern for members.
TCCI CEO Michael Bailey said rising insurance premiums had pushed many small businesses to reduce coverage or forego insurance altogether.
“We know too many small businesses in Tasmania are under-insuring or not insuring at all,” he said, as reported by ABC. “They just can't afford it. The price of insurance has gone through the roof.”
THA chief executive Steve Old said the current market had left hospitality and community venues exposed, with some clubs facing premium hikes that made ongoing operations unsustainable.
“We’ve seen clubs forced to reduce services, cancel events, or even shut their doors altogether because they couldn’t find affordable or suitable insurance,” he said, as reported by ABC.
He pointed to the case of a King Island venue that reportedly dropped its building insurance after premiums rose from $25,000 to $70,000.
However, economists and industry representatives have criticised the proposal.
Economist Saul Eslake questioned the wisdom of a state government entering the general insurance market, citing financial exposure and capacity concerns.
“Governments have no business running insurance companies. The private sector is perfectly capable of doing it,” he said, adding that Tasmania would still depend on global reinsurance, limiting the benefits of localisation.
The Insurance Council of Australia (ICA) expressed strong opposition, warning that TasInsure would transfer private-sector risk to the public and increase taxpayers’ exposure to natural disaster losses.
“This proposal poses significant financial risk to Tasmanian taxpayers. Overseas examples show that taking risk on to the public balance sheet is a bad idea, particularly when that risk is expected to grow as a result of climate change,” said ICA general manager of public affairs Matthew Jones.
The ICA called for more direct approaches to improving affordability, such as eliminating state-based insurance taxes and investing in risk mitigation.
“To address the issues underlying insurance pricing government and industry must work together. The insurance industry is committed to progressing this issue in good faith with the next Tasmanian government,” Jones said.
