Tasmania’s plans for a state-owned insurer fail to consider the need for customer advice, which is a “critical omission”, while the proposed design could distort the market and increase risks for the government, brokers warn.

Consumers will miss out on professional advice, claims advocacy and informed support if TasInsure products are not made available through the intermediary sector, the National Insurance Brokers Association says.

“This concern is particularly acute for the client segments TasInsure proposes to serve – small businesses, community organisations and regional customers,” it says in a submission on the plans. “These clients often face complex risk profiles requiring professional assessment.”

NIBA says TasInsure appears to be positioned as a “first-resort” competitor in a model that could distort the market and discourage private investment, concentrate risk on the government balance sheet and allow cross-subsidisation that obscures true risk costs.

TasInsure should instead operate as a last-resort model targeting genuine availability failures, the submission proposes.

“NIBA strongly recommends that the government release comprehensive financial modelling, including stress testing under major loss scenarios, before finalising legislation.

“This should include analysis of reinsurance costs, capital adequacy requirements and projected claims experience across all proposed product lines.”

The submission warns against including workers’ compensation and says TasInsure should join the Australian Financial Complaints Authority.

Premier Jeremy Rockliff, facing his second election in less than two years, last July promised to launch TasInsure to lower premiums.

Submissions on a discussion paper and preliminary draft bill closed on January 9.

NIBA says abolishing the fire services levy, which adds about 28% to business premiums, should instead be prioritised, because it would deliver immediate savings without the complexity and risk of establishing a state-owned insurer.

The government announced in 2023 that it intended to scrap the levy, but progress stalled the next year amid alternative funding model disagreements.

The Tasmanian Council of Social Service says TasInsure should include public liability policies covering child sexual abuse and physical and sexual abuse, and urges the government to consider removing the state’s 10% insurance duty. 

TasCOSS notes government ownership of an entity does not guarantee lower prices, as shown in the energy industry, and it is “interested to better understand the assumptions, modelling or costings” underpinning the proposal.

After initial feedback the government will release an updated version of the bill for further consultation.

The NIBA and TasCOSS submissions are here and here.