Australian Government, Australian Government Actuary

1 Introduction

1.1 Premium increases of several hundred per cent over the past few years have been a feature of residential strata title insurance in North Queensland (NQ).

1.2 On 28 June 2012 the Government asked the Australian Government Actuary to investigate the causes of the premium increases and to report by 30 September 2012. This was in response to a report by the Standing Committee on Social Policy and Legal Affairs presented in March 20121.

1.3 This report sets out the results of my investigation.

1.4 I examined whether some or all of four possible factors (identified in the Committee's report) are likely to have contributed to the premium increases. The factors considered were:

  • historical under-pricing;
  • the cost of reinsurance;
  • recent losses caused by natural disasters and the associated accumulation of risk in NQ; and
  • decreasing competition, leading to price gouging.


1.5 I have found that the first three items are inter-related and that a convergence of events has led to the premium outcomes that have been observed. I have not found that insurers have been price gouging.

1 The Committee's report is titled “In the Wake of Disasters Volume Two: The affordability of residential strata title insurance”