The Tasmanian government’s proposed state-owned insurer would lose money from day one and leave taxpayers on the hook for hundreds of millions of dollars, according to new economic analysis.
Independent modelling by Lateral Economics suggests TasInsure would run annual operating deficits of up to $13 million, require $150 million in establishment costs and need up to $510 million in capital reserves.
The analysis, commissioned by the Insurance Council of Australia, warns the scheme’s ongoing losses would drain the Motor Accidents Insurance Board’s available reserves within 15 years.
“The Lateral Economics analysis shows TasInsure would expose taxpayers to losses exceeding hundreds of millions of dollars, while doing nothing to address the underlying risk,” Insurance Council CEO Andrew Hall said.
The industry body released the findings alongside a policy paper outlining alternative solutions to growing insurance affordability pressures in the state.
Tasmania has the highest ratio of property values to economic output in Australia, with $119 billion in insurable dwellings representing 278% of state domestic product.
About 98% of the state is classified as bushfire-prone.
“The question isn’t whether action is needed, it’s about finding the most effective solutions that will genuinely help Tasmanians over the long term,” Hall said.
The Insurance Council is pushing tax reform as its primary alternative.
The state government collected $260 million from insurance taxes last year, adding 21% to household premiums and up to 48% for businesses.
Removing stamp duty alone would cut costs by 10% for all policyholders, the industry body says.
The council is also calling for greater investment in disaster resilience, pointing to the Launceston flood levee as proof the approach works.
“It prevented $216 million in losses during the 2016 floods and generates annual premium savings of up to $14 million,” Hall said.
“This is why we need solutions that reduce risk, not just transfer it.”
Separate analysis by consultancy Finity found $46 million invested in fuel management and flood resilience would deliver $940 million in benefits by 2050.
The Insurance Council’s report also calls for a review of civil liability laws, which have not been updated since the early 2000s.
Public liability premiums have jumped 55–60% nationally since 2019.
The industry body also warned against any government move into workers’ compensation, noting Tasmania’s privately underwritten scheme has remained stable.
Meanwhile, government-run schemes in New South Wales and Victoria have seen premium increases of 29% and 41% respectively since 2021-22.
“The insurance industry is ready to work constructively with the government and community on solutions that will genuinely help Tasmanian families and businesses afford insurance over the long term,” Hall said.
The state government this week appointed financial services and insurance expert John Trowbridge to support the delivery of TasInsure.
“We are getting on with the job of establishing TasInsure to deliver cheaper and fairer insurance for Tasmanians,” Premier Jeremy Rockliff said.
