The level of taxes on general insurance by state / territory.
Last week I posted an article on my thoughts on the findings of the latest of a long list of inquiries into the affordability of insurance in Northern Australia. See https://www.allanmanning.com/inquiry-into-the-affordability-of-insurance-in-northern-australia/
As I read through everything I noted that the Insurance Council of Australia estimates that insurance taxes add more than 50% to the cost of an insurance premium in New South Wales. In the states and territories that cover Northern Australia it ranges from 19.8% to 21%. Please see below for the full list.
Anyone who knows anything about basic economics knows that the more something costs they less people buy. When it comes to something that protects the financial position of home owners, investors or business owners it means that the risk of under or non insurance is not carried by the general insurance industry but by individuals and the tax payer. Add to this the mental stress that such losses create, politicians should work to incentivise home and business owners to insure fully – not put up unfair and unjust financial barriers.
If the Federal and State Governments were genuine in their desire to assist those in Northern Australia then eliminate the taxes on general insurance.
But rather than do the right thing they have invested in yet another inquiry that has come to the same conclusion as so many before.
Hi Alan,
It’s crazy to see how much the taxes increase the bottom line. Especially the enormous ESL compounding effect to GST and S/D.
As an AR in NSW we are constantly discussing how detrimental the ESL is on insurance – i have spoken to our local representative and am advised they are working on new formulas to implement a strategy similar to that of Victoria through the rates system. It would be good if this was implemented sooner rather than later!