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Tuesday, 30 October 2012
Page: 12652


Mr CHRISTENSEN (Dawson) (22:10): On the morning of 15 February 2008 a disaster was unfolding in Mackay, North Queensland. An extraordinary amount of rain fell in a six-hour period in what was later described as one-in-200-year flood event. It resulted obviously in widespread floodwaters, ruining homes across the city. Again, in 2011, North Queenslanders suffered disaster at the hands of Cyclone Yasi, the worst cyclone to hit Queensland in almost 100 years. But the disaster unfolding in North Queensland today is no less a disaster than those two events. The insurance disaster choking North Queensland this year is the unreasonable and unconscionable actions of insurance companies to whom the Gillard Labor government has given free rein.

Whether home owners want it or not—whether they need it or not—they are having outrageously expensive flood insurance thrust upon them. Homes in West Mackay and Home Hill with insurance premiums of $1,700 last year are paying more than $3,000 this year. In Mackay, the QBE's premium increase this year has gone from $135.73 a month to $253.38 per month—an 87 per cent increase.

But they are the lucky ones. An Allianz home and contents insurance premium in Andergrove went from $94 a month last year to $356 a month this year—that is almost a four-fold increase. The premium for a Mackay home went from $1,992 last year to a price-gouging $8,133 this year—more than triple in a single year, and that is for a house that didn't even flood in the one-in-200-year flood event in 2008. A two-bedroom Mackay house with a premium of $2,642 last year went to $13,616 this year. The owner has not paid it because she cannot find that much money.

Home owners are considering dropping cover altogether. But unit owners are compelled by law to have strata title insurance. A set of units in Bowen has seen their premiums rise from $6,668 in 2009 to $48,000 in 2012, with the cyclone excess rising from $100 to $10,000. Mark Faulkner has a property in a five-level residential building in Mackay, where the insurance premium went from $25,000 in one year to $102,000 the next.

There is also the bizarre case where Mackay resident Karen Leibie is wondering what her insurance premium bill will be when it arrives in a month's time. In the past three years, her insurance bill has risen from $600 to $1,100 and then to $2,200. And what is it for? A shared driveway—just a driveway.

What is a greater disaster for North Queensland is a complete market failure. When we are seeing homes in Townsville being charged premiums of $20,000 and a home in Ingham charged $26,000, we have market failure. My colleague, the member for Leichhardt, reports that a guest house cannot get insurance at all after 13 rejections and the bank is now asking them to 'show cause'. Faced with a 324 per cent insurance premium increase for Seastar Apartments, Whitsunday resident Margaret Shaw, who lives there, sought alternative cover from QBE, AMP, CHU, Chubb, QUS, Zurich, Allianz, Wesfarmers-Lumley and Vero. None were prepared to quote for North Queensland or for properties of that value except Vero, who offered the same ridiculously high premium as SUU but with a $100,000 cyclone excess.

The House of Representatives Standing Committee on Social Policy and Legal Affairs held an inquiry into strata title insurance affordability last year. Shamefully, the only recommendation the government adopted was one that handballs the problem to the state government, while the other one was the commissioning of a government actuary report on insurance in North Queensland The report they did, though, was nothing more than a regurgitation of the Insurance Council of Australia propaganda that has failed to fool North Queenslanders who have had their budgets gouged by insurance companies for the past two years. The report says, basically, 'I have not found that insurers have been price gouging.' My response is, 'Because you did not look.' Responding to the report, one of the tireless workers in my electorate on this issue, Lester Riley, wrote:

You have totally misrepresented the situation existing in the actual marketplace. The phrases used in the report have all been heard before from the insurance companies but that does not mean that they are truthful.

Lester is a self-funded retiree, and he says:

I am watching my life savings and value of the property I live in continue to decline at an alarming rate.

Lester and Margaret Shaw have proposed further ways for the government and insurance companies to solve this issue, and one of those is something the government did not implement, which is the expansion of the Australian Reinsurance Pool Corporation that John Howard set up to avoid market failure for terrorism insurance in the wake of the 2001 terrorist attacks. The government did not want to use the fund to avoid market failure in North Queensland, but, as my colleague, the member for Herbert, points out, it did not stop— (Time expired)