The Queensland Government’s plan to increase the cost of general insurance in next week’s Budget flies in the face of numerous tax reviews and the increasing incidence of flood damage in the State, the National Insurance Brokers’ Association has said.
NIBA CEO, Dallas Booth, said a string of reviews, including the Henry tax review and the 2011 Tax Summit, supported the removal of taxes such as stamp duty on insurance because they are among the most inefficient imposts.
“It defies logic that the Queensland Government would be increasing stamp duty on insurance policies, like home and contents insurance at a time when it has paid out record amounts of flood relief in the last two years to those who were uninsured or under-insured.
“Surely the best approach is to encourage more people to protect their property through insurance rather than relying on the public purse.
“It is also a little disingenuous to link this tax increase to funding Queensland’s contribution to the National Disability Insurance Scheme. The NDIS is not actually an insurance scheme. No one pays for an insurance policy, rather it is a government-funded safety net to provide lifetime support for the disabled.
“Property insurance premiums are all about recovery from cyclones, storms and floods – something completely different.”
Booth said taxes on insurance, which can add as much as 20% to the cost of a policy, were directly contrary to good social policy.
“Insurance is the main source of funds for restoration and recovery from natural and other disasters, and lack of comprehensive insurance cover results in real on-going detriment to individuals, families and communities,” Booth said.
He said NIBA recognised that state governments were strapped for cash but this move sent a message that those responsible enough to insure their assets would be penalised.
“Economic research has shown that replacing taxes like stamp duty with new or increased broader based taxes will provide a significant boost to GDP.”
