The key drivers of insurance costs in the ACT are the workers’ compensation scheme, regulation that is inconsistent with other jurisdictions and climate vulnerability, the National Insurance Brokers Association says.

Policymakers can help create a more stable and affordable insurance environment, it adds in a submission to last week’s inquiry into territory insurance costs.

“High workers’ compensation premiums, increasing litigation, and the growing impact of climate-related disasters are placing pressure on the insurance market ... Without targeted reforms, these trends will continue to affect business confidence, economic resilience and employment opportunities across the territory,” NIBA says.

Workers’ compensation cover is a “significant factor”, particularly for small businesses.  

The ACT framework differs significantly from other jurisdictions, particularly around common law claims and premium regulation. The territory’s premiums are among the highest in the country, and well above those in NSW across most industries.

NIBA says the absence of a whole person impairment threshold and limits on common law damages have raised premiums. 

Without a minimum impairment requirement, there is greater risk of litigation over minor injuries, increasing legal expenses and insurer liabilities.  

“By providing a clear eligibility benchmark, the threshold enhances predictability for insurers and contributes to a more stable premium environment for businesses. This is particularly important in ... ensuring that insurance remains affordable.”

Some states have a premium cap to limit variances, but premium increases in the ACT are uncapped.

Most other jurisdictions also exclude or limit “journey claims”, but the ACT workers’ compensation scheme covers injuries sustained while travelling to and from work.  

“The inclusion of journey claims raises concerns about greater claim frequency and complexity, further driving up costs within the scheme,” NIBA says.

“It also introduces a potential overlap with coverage provided by compulsory third party insurance, adding to administrative challenges and uncertainty around liability allocation.”