Pilbara insurance ‘unfair’: report

A Pilbara non-profit development body says the region is bearing the brunt of large insurance claims coming from Queensland’s cyclone-prone areas.

Speaking at a business breakfast in Hedland last week, Regional Development Australia Pilbara chief executive Diane Pentz said her group’s soon-to-be-released study into comparative insurance and banking costs in the region found costs had risen rapidly since 2010.

She said Pilbara property insurance premiums for the region’s main centres were now between 290 and 350 per cent higher than in Perth.

While local premiums might not have soared as high as in parts of Queensland, Ms Pentz said they did not reflect the low level of claims coming out of the Pilbara.

“We’ve … noticed there has been an increase in claims as a result of cyclones, ” she said.

“But … those claims have not come out of the Pilbara.”

“When there is an incident in the Pilbara … the claims have been very low.

“So we are not contributing significantly to the costs and yet we are having to bear them.”

The RDA Pilbara’s findings come as the Federal Government earlier this year set up a taskforce to investigate high insurance premiums in northern Australia.

It also follows vocal criticism of Pilbara insurance costs by Hedland real estate agents. The agents and Pilbara residents have long complained that high insurance premiums added to the already high costs of doing business in the region.

Ms Pentz said the RDA Pilbara’s study backed this belief.

She said a survey forming part of the study found 90 per cent of the Pilbara’s small to medium-sized enterprises “indicated that their main constraint to starting a business is insurance costs”. The high premiums were compounded by difficulties in winning loans from banks, Ms Pentz said.

She said banks often required higher housing deposits in the Pilbara than in Perth, for instance, because they deemed the region to be more risky.

She said the new study now provided RDA Pilbara representatives with the evidence to travel to Canberra and lobby the government for action.

With insurance companies reluctant to change their business models, Ms Pentz said she believed government action was necessary.

“There has to be some policy decision or driver that would put pressure on the (insurance) institutions themselves to review … the way they are going about their business, ” she said.