The Insurance Council of Australia (ICA) said efforts to improve insurance affordability in Tasmania should focus on addressing the underlying drivers of rising costs, following the state government's announcement that it will establish a new statutory authority, TasInsure, aimed at reducing premiums.
The ICA welcomed the government’s commitment to continued collaboration with insurers and reinsurers on risk reduction, data sharing and affordability. However, it said the main cost pressures stem from factors such as increasing extreme weather risk, higher building and repair costs, compensation payouts, and the impact of taxes and regulation.
ICA argued that several key levers already within the Tasmanian Government’s control could help reduce premiums without creating a new authority. These include state taxes, civil liability settings and investment in risk mitigation.
It highlighted that removing stamp duty on insurance could save households around $161m annually and cut home and contents insurance costs by about 10% It also said abolishing the Fire Services Levy could save businesses approximately $110m a year. In addition, it pointed to civil liability laws that have not been comprehensively updated since the early 2000s, saying they have contributed to higher business insurance costs.
The ICA also cited independent analysis suggesting that $46m invested in extreme weather risk reduction could generate up to $940m in benefits by 2050.
While noting the government’s intention to potentially intervene further in the insurance market, the ICA said it remains unclear how this would be implemented without a standalone insurer, subsidies or pricing mandates, all of which could carry fiscal or market risks.