RACT has urged the Tasmanian government to commit to “deeper collaboration” on premium affordability, to avoid budget risks from starting a state-owned insurance company.

Group CEO Mark Mugnaioni says analysis by Lateral Economics, released by the Insurance Council of Australia last week, mirrors RACT concerns about the proposed TasInsure model.

“The root causes behind insurance price rises are the increasing likelihood of natural disasters, the increasing costs of claims, including building materials and labour, and government taxes policies,” he said.

“Failure to address these root causes would simply transfer financial risk to the state budget and all taxpayers.” 

Mr Mugnaioni says the government should be applauded for putting affordability on the agenda, but it is in everyone’s interests to develop a long-term solution that avoids serious unintended consequences.

RACT has made a submission to a government consultation, outlining a suite of alternative policy measures.

“We look forward to presenting these proposals to government directly in the near future and will release our submission in full to help inform this important public discussion,” Mr Mugnaioni said.

Premier Jeremy Rockliff says the government had received 18 submissions on a TasInsure discussion paper and preliminary draft laws.

It has also appointed insurance consultant John Trowbridge to provide a high-level strategic assessment of operating models. 

Lateral Economics concluded TasInsure would “likely impose recurrent losses and expose the state to large fiscal risks, and it should not be established”.

See ANALYSIS.