The plan by the Tasmanian Liberals to establish a state-owned insurance company would put significant financial risk onto the public balance sheet according to Insurance Council of Australia (ICA).
A media release by ICA said the proposal would fail to do anything about the underlying causes of insurance pricing and only transfer risk from a functioning private market onto the public purse, exposing Tasmanians to the cost of recovering from significant extreme weather.
The Australian private insurance market provides a A$40bn ($26.30bn) capital injection from global reinsurance markets annually, supporting economic recovery in the wake of disasters. Government-backed insurance schemes, however, with heavily subsidised premiums, shift this disaster risk onto the taxpayer.
Approximately 98% of Tasmania's land area is designated as bushfire-prone and a strong private insurance safety net is critical for Tasmanians to manage future risk.
According to ICA, the most immediate way the next Tasmanian government can improve insurance affordability is to abolish stamp duty and the Fire Services Levy (FSL) on insurance products, which would provide quick and targeted relief for families and businesses.
In 2024-25, the government collected more than A$150m in insurance taxes from Tasmanians, after failing to reform the FSL in its previous term. Over the four years from 2024-25, Tasmanians are expected to pay A$631m in state-based insurance taxes.
ICA release said the next Tasmanian government can take further steps to improve insurance affordability by investing in risk reduction to better protect properties against increasingly intense and frequent extreme weather.
ICA general manager (public affairs) Mathew Jones said, “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.
Mr Jones said, “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.”