Residents in Darwin have reported substantial hikes in their insurance premiums. For instance, one homeowner noted a two-thirds increase in their home and contents insurance since 2021, despite not having made any claims. This trend is not isolated, with several other property owners in the region facing similar challenges.
The Australian Competition and Consumer Commission (ACCC) highlighted that insurance premiums in northern Australia remain significantly higher than in other parts of the country. In 2023, the median home and contents premium in the Northern Territory increased by 11%, while strata insurance policies saw a 7% rise. These figures underscore the persistent affordability issues confronting residents in these areas.
The cyclone reinsurance pool was designed to lower insurance premiums by reducing the cost of reinsurance for insurers covering cyclone-related risks. However, the ACCC's data indicates that while some consumers have benefited from reduced premiums, these savings have been offset by factors such as a hardening global reinsurance market, an uptick in extreme weather events, and rising costs of building materials and labour.
Industry experts suggest that the limited competition among insurers in northern Australia contributes to the escalating premiums. The high cyclone risk in the region deters many insurers from offering coverage, particularly for strata buildings, which are legally required to be insured for full replacement value. This lack of competition forces some owners' corporations to seek insurance from offshore providers, often at significantly higher costs.
In response to these challenges, consumer advocacy groups are calling for a restructuring of the cyclone reinsurance pool's funding model. They propose a more equitable distribution of costs to alleviate the financial burden on policyholders in northern Australia. Additionally, there is a push for increased transparency and competition within the insurance market to ensure fairer pricing for all consumers.
For strata property owners in the Northern Territory, these developments underscore the importance of staying informed about insurance market trends and advocating for reforms that promote affordability and accessibility. Engaging with industry bodies and participating in discussions about policy changes can help ensure that the needs of property owners are adequately represented and addressed.
