NEWS

Joint Call for Action: Addressing Insurance Affordability in Queensland

The Australian Consumers Insurance Lobby Inc, Financial Rights Legal Centre (which operates the national Insurance Law Service), Queensland Consumers Federation, Consumers Federation of Australia, Unit Owners Association of Queensland and Owners Corporation Network are united in calling on the Queensland Government to show leadership in addressing the escalating crisis of insurance affordability.

In the face of compelling evidence that Queensland is currently the most unaffordable and uninsurable state in Australia, these organisations believe it is imperative for the government to implement meaningful reforms. This joint call to action highlights the urgent need for measures that will alleviate financial pressures on households and businesses, promote fairness, and enhance financial resilience across the state.

Key Issues:

Queensland residents and businesses, particularly those in high-risk areas, are facing exorbitant insurance costs.
The current system disproportionately burdens those who can least afford it, exacerbating challenges related to insurance affordability, availability, and financial resilience.

Proposed Solutions:

Removal of Stamp Duty on Insurance: Eliminating or reducing stamp duty on insurance premiums can provide immediate financial relief to consumers and businesses, reducing the overall cost of insurance.
Investment in Resilience and Mitigation Measures: Allocating funds towards resilience and mitigation initiatives can help reduce the risk of damage from natural disasters, leading to lower insurance premiums in high-risk areas.

Statements

Australian Consumers Insurance Lobby Inc: “Some residents in North Queensland are paying up to ten times more for their insurance, disproportionately increasing their stamp duty payments, yet recent budget measures have failed to address this critical issue.” – Tyrone Shandiman, Chairperson.

Financial Rights Legal Centre, which operates the national Insurance Law Service “Insurance unaffordability is becoming widespread across Australia. By its very nature, this issue disproportionately impacts people on lower incomes who tend to occupy a greater proportion of housing in more disaster-prone areas. Queenslanders face unique affordability challenges, so we urge the government to take decisive action to help address these issues before even more people lose the ability to protect themselves from risk.” – Karen Cox CEO.

Consumers Federation of Australia: “Insurance affordability has emerged as a critical concern for consumers across Australia, with Queensland facing its own unique challenges. We fully support the Queensland government in taking action to improve the affordability and availability of insurance.” – Gerard Brody, Chairperson.

Unit Owners Association of Queensland (UOAQ) "The exorbitant cost of insurance is affecting the quality of life for unit owners across Queensland. We need decisive action to protect our homes and our financial wellbeing." — Bob Boundy, Secretary/Treasurer.

Owners Corporation Network (OCN) "High insurance costs are a major concern for property owners. We urge the government to consider reforms that will make insurance more affordable and accessible for everyone." —Karen Stiles, Executive Director.

Relevant Documents:

Queensland Budget Fails North Queensland Residents on Insurance Cost of Living, Favours SEQ

Queensland Treasurer Cameron Dick delivered the state budget yesterday, offering cost-of-living savings for Queenslanders. However, it glaringly failed to address the insurance cost crisis in North Queensland, opting instead for cheaper public transport fares to benefit Southeast Queensland.

Queensland, Australia's most uninsurable and unaffordable state, is predicted to have 6.5% of homes effectively uninsurable by 2030, according to a Climate Council report, “Uninsurable Nation: Australia’s Most Climate-Vulnerable Places" (click here). In comparison, New South Wales, the next most uninsurable state, is expected to have 3.5% of homes effectively uninsurable by 2030. This disparity demands immediate action from the Queensland government to ensure economic prosperity for all residents.

“North Queensland residents and those grappling with extreme affordability issues should be outraged by the Queensland government's inaction and lack of attention to this critical issue. The government's failure to address insurance affordability has cemented Queensland's status as the most uninsurable and unaffordable state in Australia.” ACIL Chair Tyrone Shandiman said.

Residents in North Queensland pay at least twice the premium of those in other parts of Australia, and consequently, twice the stamp duty, as revealed in the ACCC Northern Australia Insurance Inquiry of 2020. Despite the implementation of the Cyclone Reinsurance Pool, it has failed to deliver the necessary savings to North Queensland residents (more info, click here).

As a result, North Queensland residents pay significantly higher insurance stamp duty than other parts of Queensland. With the budget’s focus on reducing public transport fares, it is evident that additional revenues from insurance duties from northern residents are subsidising transport services predominantly utilised in high-density Southeast cities. While the increase in the announced threshold for stamp duty relief for first home buyers is a welcome step, what is the point if those buyers cannot afford to insure their new homes?

Margaret Shaw, a Queensland resident who began advocating for fairer, more affordable insurance for North Queensland in 2011, said, “The sudden rise of 324% in insurance premium for our property led to our premium becoming an astonishing three to five times greater than those for similar properties in other parts of Australia. Regrettably, this also translated to a three to five time increase in stamp duty expenses. It's disheartening to witness the unfairness of consumers in Northern Australia, who are already grappling with cost-of-living pressures related to insurance costs, being compelled to contribute so much more stamp duty than their counterparts in other regions of the country for properties of similar value.”

ACIL has met with representatives from both Labor and LNP earlier this year, advocating for stamp duty reform. ACIL calls for the abolition of stamp duty as the first preference or increased spending on mitigation and resilience to reduce insurance premiums. We urge the LNP to address this critical issue in their budget reply. More information on ACIL’s concerns and recommendations can be found in the attached flyer.

ACIL Advocates for Industry Action to Address Empathy Gap After Flood Inquiry

The management of insurance claims with empathy has come under the spotlight during the Inquiry into insurers’ responses to the 2022 major floods claims. Both parliamentary committee members and consumers have voiced significant frustration over the perceived lack of empathy shown by insurers during the claims process. In response to these criticisms, ACIL recommended to the Australian and New Zealand Institute of Insurance and Finance (“ANZIIF”) the development of a course focused on empathetic claims management.

In response, the ANZIIF has launched a new Empathetic Claims Management short course. This initiative aims to address the gaps identified during the Canberra Inquiry. Katrina Shanks, CEO of ANZIIF, expressed her hopes for the course, stating, "We are hoping this course is well received by the insurance sector as we endeavour to understanding current concerns and issues in the sector and provide relevant and timely professional development to the sector to ensure we are all working together to obtain good consumer outcomes."

Empathy in claims management is also a focal point in the recent review of the General Insurance Code of Practice. In its submission, ACIL highlighted that "recognising and addressing consumers' emotional and situational needs not only enhances their experience but also reduces conflicts." Proposing an empathy standard for the Code, ACIL advocates for insurance interactions to be conducted with heightened understanding and care, emphasising that empathy is crucial during crises, such as property loss or accidents, as it profoundly affects consumer satisfaction and trust. An empathetic approach can transform potentially adversarial situations into supportive experiences, thereby fostering trust and reducing disputes.

ACIL recommended the inclusion of empathy standards and the introduction of mandatory empathy training for insurance professionals in the Code.

ACIL Chairperson, Tyrone Shandiman, who is also the Managing Director of Strata Insurance Solutions, remarked on the critical role of empathy in the claims management process, especially in highly traumatic scenarios or where consumers face financial hardships and vulnerability. “In my own business at Strata Insurance Solutions, we frequently encounter clients involved in highly traumatic events requiring empathetic handling. Just last month, we managed a particularly distressing claim involving a fatality, which necessitated working closely with the insurer to expedite property repairs," Shandiman shared. He stressed the importance of adequate training for claims staff to handle such sensitive situations effectively.

Sue Shandiman, the claims manager at Strata Insurance Solutions and mother to ACIL Chairperson Tyrone Shandiman, recently completed ANZIIF's one-hour Empathetic Claims Management course. Reflecting on her experience, Sue noted the practicality of the course, stating, "The training provided practical learning outcomes that are immediately applicable in scenarios that demand empathy. It's a vital resource for claims managers striving to improve their handling of sensitive situations."

For those interested in enhancing their claims management skills with a focus on empathy, the course is available via this link: https://anziif.com/professional-development/short-courses/ecm24