Home and business insurance premiums will become cheaper for people living in flood and cyclone-prone areas of northern Australia from July next year, the federal government says.
The government has announced a reinsurance pool backed by a $10 billion government guarantee.
The pilot program will subsidise†the cost of insurance coverage for cyclones and related flood damage.†
The government expects this will reduce premiums by more than†$1.5 billion for households, strata and small businesses†north of the Tropic of Capricorn over 10 years.
In excess of 500,000 property insurance policies are expected to be eligible to receive cover.
"Homeowners and businesses have been faced with crippling insurance costs, and in some cases, can't get insurance at all," Prime Minister Scott Morrison said.
"It's not OK, and we're going to change that."
Mr Morrison said the government investment would drive down premiums by acting as "a floor underneath the insurance industry".
"That will encourage more insurance companies into the market," he said.
"I know it's been a cause of great concern in the north for a very long time," he told Cairns radio station 4CA.
PM unsure†how big household insurance savings would be
Labor's northern Australia spokesperson Murray Watt said the announcement lacked details.
"What we really need to hear from the Prime Minister today is how much insurance premiums will fall in North Queensland and when it will happen," Mr Watt said.
He said the federal government had been "promising to fix this problem since it was first elected eight years ago".
"Now what they're telling us is that they'll promise to fix it again ? but not until after another election."
But Mr Morrison declined to put a figure on how much premium prices would be reduced.
"The government hasn't said 50 per cent ? that's what others are speculating," he said.
"We have a more cautious view on that, but let's just see how that plays out."
Final design of reinsurance pool scheme to be determined
Federal Treasurer Josh Frydenberg said a taskforce led by the treasury would work with the insurance industry closely and deliver the final design of the reinsurance pool.
"More affordable insurance means peace-of-mind for hundreds of thousands of Australians across northern Australia, knowing that their economic livelihoods are protected," he said.
The federal government has also pledged $40 million for the North Queensland Strata Title Resilience Pilot Program, aimed specifically at reducing insurance cost for strata properties, also known as body corporate insurance.
Federal Housing Minister Michael Sukkar said the three-year pilot program would subsidise the cost of cyclone risk mitigation.
© ABC 2021
00:33 AEST Black mould is the latest threat for†flood-affected homeowners, with the scale of the problem†overwhelming volunteer crews.