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Tackling the underinsurance crisis in Australia

  • by The Quotesonline Team

Recent flood and fire disasters across the country have highlighted the stark fact that many Australians are underinsured.

The Australian Strategic Policy Institute (ASPI) has issued a report urging the Council of Australian Governments (COAG) to play a role in solving the underinsurance crisis. The report suggests an independent COAG study look at social and government policy initiatives to encourage insurance cover take-up.

The report says, “A COAG-commissioned independent review should consider whether there’s an approach that can improve current outcomes in a more cost-effective manner, specifically by studying the ways that private insurance can strengthen resilience efforts in Australia.”

Noting this topic has been raised before, especially during the Victorian Royal Commission into the 2009 bushfire, the report argues there has never been a national study of the various insurance models. It wants government co-contribution and compulsory insurance schemes looked at as well as a catastrophic loss pool funded by a levy through insurance premiums. It also wants insurance pool schemes and government reinsurance looked at as part of the study.

The ASPI report also called for the Insurance Council of Australia (ICA) to be made a member of the National Emergency Management Committee (NEMC). Other recommendations include encouraging mortgage lenders to insist a property have full insurance coverage against natural hazards; abolishing taxes on insurance as recommended by the Henry Review; and conducting comprehensive landscape assessments to ensure insurance premiums are based on risk.

“We need a new approach to financing the costs of natural disasters and encouraging those living in high-risk areas to be better prepared,” states the report. “The reality is that all Australian taxpayers will have to bear a share of this cost.”
Sourced and edited from insurancenews.

14 February 2011

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