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Wednesday, 21 March 2012
Page: 3794

Mr PERRETT (Moreton) (16:45): On behalf of the Standing Committee on Social Policy and Legal Affairs I present the committee’s report entitled In the wake of disasters:volume two: the affordability of residential strata title insurance, together with the minutes of proceedings and evidence received by the committee.

In accordance with standing order 39(f) the report was made a parliamentary paper.

Mr PERRETT: by leave—Today I present the report of the Standing Committee on Social Policy and Legal Affairs into the affordability of residential strata title insurance. This is the second and final volume of its inquiry into the wake of disasters, which has examined a range of insurance issues following the natural disasters that have devastated many parts of Australia in recent years. The impact of Cyclone Lua in Western Australia and severe flooding in parts of Victoria, New South Wales and Queensland remind us that we live in a place that is prone to natural disasters. All Australians need to be able to access affordable and appropriate insurance to provide cover against the risk of being affected by these kinds of events. We need a healthy and competitive insurance industry that is responsive to the needs of its customers and has the capacity to provide adequate cover at affordable prices for all Australians.

On 27 February 2012 the House of Representatives Standing Committee on Social Policy and Legal Affairs tabled its report In the wake of disasters: volume one: inquiry into the operation of the insurance industry during disaster events. The report made a range of recommendations aimed at ensuring that the insurance industry has the capacity to respond to people's claims on their policies in a timely manner. During the aforementioned inquiry the committee also received evidence about spiralling insurance costs, both in disaster affected areas and across Australia more broadly. In particular, the committee heard of extremely concerning increases in residential strata title insurance in North Queensland. In view of these concerns the report also recommended the immediate establishment of a task force to address the rising costs and potential market failure in the insurance industry across Australia. Many unit and apartment owners, particularly those in North Queensland, have been confronted with increases of over 500 per cent in their insurance premiums in recent years. This has been a result of a complex range of contributing factors, none more so than a glaring lack of competition in the market for residential strata title insurance.

The committee recognised the urgency of residential strata title insurance affordability and resolved to conduct an inquiry into the issue with a short reporting time frame. The committee received the terms of reference on 24 November 2011, conducted four very well-attended public hearings and received 431 submissions and 17 supplementary submissions. The committee delivered its report today, outlining a clear and direct course of action to both alleviate immediate hardship and address longer term sustainability issues. The recommendations contained in this report call on the government to strengthen the regulatory frameworks of bodies corporate, examine the methodologies for the assessment and pricing of risk, increase transparency in all strata insurance cost components and raise consumers' awareness of their rights and responsibilities.

The committee is asking the ACCC to examine the cost drivers and relative profitability in the provision of strata insurance policies by insurers and to investigate whether there has been anticompetitive behaviour in the North Queensland strata insurance market. I reiterate that the committee responded expeditiously to the urgent issue of residential strata title insurance affordability. The committee trusts that the Australian government will be similarly prompt in implementing appropriate and much needed reforms in response to the recommendations contained in this report.

I thank the hundreds of people who made submissions to this inquiry and the many more who attended public hearings and bravely spoke about their dire circumstances. While there is no quick fix for this complex issue, I trust that this report sets in motion the actions required to balance the insurance market and address affordability issues for strata title insurance.

I thank the local senators and members who lent their support to their constituents during the public hearings, including Senator McLucas and the member for Herbert. The two supplementary members to the committee—the member for Leichhardt and the member for Dawson—made a fantastic contribution. I would also like to thank all the hardworking members of the committee for taking on this inquiry in addition to their already increased workload in recognition of the urgency of the issue and the need to initiate government action. I thank Dr John White and Dr Anna Dacre, as well as my Chief of Staff, Matt Jutsum, who finishes with me on Friday, for the great work he contributed to this report and also for his loyal service over the last few years.