The Tasmanian government has released early draft legislation for its proposed state-owned insurer, despite having no financial modelling or business case to back the policy.
Premier Jeremy Rockliff today launched a consultation paper for TasInsure, promising it would deliver “cheaper, fairer and Tasmanian owned” insurance.
However, he confirmed the government had not yet commissioned Treasury advice or finished cost projections for the scheme, which was a key election promise.
“Because it’s being done now,” he said when asked why modelling hadn’t been completed before releasing the draft legislation.
The premier said insurance premiums had increased by an average of 35%, with some businesses facing rises of 300% over five years.
“The market has failed,” he said. “When markets fail, it’s important that governments do step in.”
He said TasInsure would operate as a not-for-profit and claimed it could save households an average of $250 a year.
“When you consider increases in insurance premiums worldwide, when you consider the profit margin as well, we believe that we can reduce insurance premiums by that amount,” he said.
Rockliff pointed to the state-owned Motor Accidents Insurance Board as proof the model could work, noting MAIB premiums had risen 5% compared with the market average of 35%.
The consultation period runs until January 9, with the government employing a consultant to gather feedback from the community, businesses and the insurance industry.
Rockliff said the draft legislation would be tabled within the government’s first 100 days, which ends on November 28.
Launceston business owner Karen Burbury of Eski Group said her agriculture, accommodation and restaurant businesses had all seen a “significant rise” in insurance costs.
“Across the probably last five years we have been really trying our best to try and mitigate the cost of insurance,” she said.
“But unfortunately as a small business in Tasmania we can’t go to a standalone insurer.”
She said she had personally saved more than $6,000 on her home insurance by switching providers this year.
“I am really concerned about small businesses not insuring themselves correctly and I’m really worried about our vulnerable in our community that are choosing to not take out insurance because it’s become so expensive,” she said.
Shadow Treasurer Dean Winter said that on top of lacking a business case and financial modelling, the proposal also had no risk analysis, no pricing and no details on what products TasInsure would actually offer.
“[The premier] said there was a business case and modelling, but that it couldn’t be released because he did not want TasInsure competitors to read it. That was not true,” Winter said.
“Rising insurance costs are a serious issue affecting Tasmanians. They need serious solutions, not a hoax.”
