The Insurance Council of Australia has urged Queensland to scrap home insurance stamp duty, weighing in a month before the October 26 state election.
COO Kylie Macfarlane says it is “madness” that homeowners and renters buying insurance are taxed on the purchase.
“The most immediate way to reduce insurance premiums in Queensland would be the abolition of the 9% stamp duty charged,” she said.
At a minimum, ICA says, the next government should commit to investing the revenue collected in mitigation initiatives.
Queenslanders face a “double tax” on home insurance – 10% GST on premiums, plus the stamp duty applied on top of GST – and are forecast to pay $1.7 billion in tax on insurance in the year to June, equivalent to $265 for every state resident.
The Actuaries Institute estimates $633 of Queensland’s median annual home insurance bill of $3815 is tax.
ICA says insurers received about $4.5 billion of claims from catastrophes in Queensland in the past three years. It has outlined a dozen policy recommendations that are “vital for the next government to implement to ensure Queenslanders remain protected and secure”.
It says investing $730 million in mitigation projects over five years would deliver $6.3 billion in savings.
Other recommendations include reviewing land use planning arrangements, including resilience in building standards, standardised clean-ups following natural disasters, better data and flood mapping, and allowing interstate tradespeople to respond following extreme weather. Queensland is the only state that does not participate in the national Automatic Mutual Recognition program.
ICA says abolishing the stamp duty would be the quickest way to reduce premiums.
“Because stamp duty is charged as a percentage of the premium, the Queensland government receives a financial windfall from rising insurance premiums. This means that those facing the greatest extreme weather risk – and so paying the highest premiums – pay the most of this punishing tax.”
ICA CEO Andrew Hall says stamp duty “adds 9% to the cost of a premium in Queensland at a time when the affordability of insurance has never been more important”.
Queensland has led the country in home resilience programs and buyback schemes, he says.
“These should be extended and made permanent for the benefit of Queenslanders up and down the state.”
ICA also recommends removal of “onerous and often unnecessary” professional indemnity insurance requirements in government contacts.
These can require engineering and construction professionals to obtain levels of PI that are often unavailable in the market or go beyond what is necessary for the work undertaken, it says.
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