Insurance companies are under pressure to justify their high premiums as they start to sift through thousands of claims in the wake of Tropical Cyclone Alfred. While experts fear many affected by the latest disaster will be under-insured, the industry says governments could do their part to reduce costs.
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00:00Lismore-based Adele Wessel knew her home insurance premium would go up this year, but she was
00:08shocked when it arrived.
00:10I didn't expect it to be nearly $1,000 more though.
00:14The city, still rebuilding after the 2022 floods, was hit hard by ex-tropical cyclone
00:20Alfred.
00:21Her home was unscathed, which was lucky because to make insurance affordable, she slashed
00:27her cover.
00:28I increased the excess that I was going to pay and I also reduced the value of the home.
00:34Adele's bill shows taxes are driving up her costs by more than a quarter.
00:39New South Wales and Tasmanian residents are triple taxed, paying insurance stamp duty,
00:44emergency services levies and the GST.
00:48People elsewhere pay two taxes, except for the ACT where there's only GST.
00:54In those states where there is a higher tax take, there is a higher rate of under-insurance.
01:00The ACT boldly removed its 10% insurance duty eight years ago.
01:05There's hundreds of millions of dollars less tax being collected on those premiums than
01:10there would have been otherwise and we think it's fairer to spread that risk.
01:16To replace the lost revenue, Andrew Barr made a controversial call, increasing taxes on
01:21ratepayers.
01:22We've kept it revenue neutral, but we were prepared to expend some political capital
01:28and it did cost us votes, but now nearly eight years on, it's barely mentioned.
01:34The insurance industry wants other governments to do the same.
01:38It's labelled stamp duty unfair because those with higher premiums pay more tax, often people
01:44on the climate front lines.
01:46It is an insidious tax in that it keeps continuing to rise with the cost of insurance premiums.
01:52It needs to be abolished, or at the very least right-sized or frozen.
01:57Mehreen Faruqi chaired an inquiry late last year which recommended the federal government
02:02should incentivise states and territories to abolish insurance taxes.
02:07Unless federal government steps in and actually tries to make insurance cheaper, these communities
02:15will continue to suffer.
02:17The ABC asked all states and territories, but none are considering cutting insurance
02:22stamp duty.
02:24The NSW government plans to scrap the emergency services levy, but there's no timeline.