Ms FYLES - 2014-11-26
You have made a lot of extraordinary claims about the sale of TIO. You have claimed Territorians will be better off – fiction. You have claimed TIO will remain Territorian – wrong. You claimed at your media conference that Allianz told you it will not increase premiums, yet the Allianz representative admitted premiums would increase in three to six months. Yesterday it became weird with your claim to have put TIO ahead of the game and the cost of living pressures coming for TIO.
What exactly are the cost of living pressures for TIO? Are they your planned power and water price hikes or the looming hikes from your planned port sale? If you are referring to flood premium hikes, will you admit you got it wrong because that hits consumers?
ANSWER
Madam Speaker, I have explained it before but will tell the member for Nightcliff again. In May next year the location-based pricing model to be applied by TIO would have seen premium increases of up to 200% in places such as Katherine. This includes about 24% of the community, many parts of Rapid Creek in the member for Johnston’s electorate, parts of the rural area and many other parts of the Northern Territory.
This is as a result of reinsurance companies around the world telling their insurance companies to go to location-based risk pricing models rather than community models ....
Ms Fyles: You are saying that.
Mr GILES: You might learn something, member for Nightcliff. Across the Territory TIO provides a community risk-rating model. It is now becoming uncompetitive because other …
Ms Fyles: Protect Territorians.
Mr GILES: Member for Nightcliff, if you want to learn I will teach you because you did not seek a briefing. Competitors in the market could cherry-pick low-risk places because they had location-based risk models, but high-risk places such as Rapid Creek and Katherine were remaining with TIO at subsidised premium rates. TIO was being left with high-risk customers and losing low-risk customers, which put its pricing structure out and it was losing competition. TIO was going to a location-based risk model and high-risk customers would have had significant increases.
Partnering TIO with Allianz means it can have a greater connection with global reinsurance. It is one of the largest reinsurance companies, meaning there will be downward price pressures. Of the premiums in the Northern Territory, about 30% of each one went to reinsurance. For Suncorp, AAMI or one of those other companies in the Territory, the reinsurance cost in a premium is about 6%, 8% or 10%. If you have TIO with 300% and Suncorp at, for example, 10%, you have a 300% increase in reinsurance of a premium.
The Allianz partnership presents an opportunity for downward pressure, particularly in low-risk areas, and in high-risk areas there can be downward pressure on what the price increases would have been – around 200%. I cannot go to each individual policy because each house will be rated on the risks it has. At the time changes are made to policies, some will go down and some will go up.
The ones that come down will be as a result of the change in risk rating. With the ones that go up, Allianz is working to make sure they will not go as high as they would have under TIO ...
Ms Fyles: Point made.
Mr GILES: That is the point and the benefit of partnering with the world’s largest general insurer.
What exactly are the cost of living pressures for TIO? Are they your planned power and water price hikes or the looming hikes from your planned port sale? If you are referring to flood premium hikes, will you admit you got it wrong because that hits consumers?
ANSWER
Madam Speaker, I have explained it before but will tell the member for Nightcliff again. In May next year the location-based pricing model to be applied by TIO would have seen premium increases of up to 200% in places such as Katherine. This includes about 24% of the community, many parts of Rapid Creek in the member for Johnston’s electorate, parts of the rural area and many other parts of the Northern Territory.
This is as a result of reinsurance companies around the world telling their insurance companies to go to location-based risk pricing models rather than community models ....
Ms Fyles: You are saying that.
Mr GILES: You might learn something, member for Nightcliff. Across the Territory TIO provides a community risk-rating model. It is now becoming uncompetitive because other …
Ms Fyles: Protect Territorians.
Mr GILES: Member for Nightcliff, if you want to learn I will teach you because you did not seek a briefing. Competitors in the market could cherry-pick low-risk places because they had location-based risk models, but high-risk places such as Rapid Creek and Katherine were remaining with TIO at subsidised premium rates. TIO was being left with high-risk customers and losing low-risk customers, which put its pricing structure out and it was losing competition. TIO was going to a location-based risk model and high-risk customers would have had significant increases.
Partnering TIO with Allianz means it can have a greater connection with global reinsurance. It is one of the largest reinsurance companies, meaning there will be downward price pressures. Of the premiums in the Northern Territory, about 30% of each one went to reinsurance. For Suncorp, AAMI or one of those other companies in the Territory, the reinsurance cost in a premium is about 6%, 8% or 10%. If you have TIO with 300% and Suncorp at, for example, 10%, you have a 300% increase in reinsurance of a premium.
The Allianz partnership presents an opportunity for downward pressure, particularly in low-risk areas, and in high-risk areas there can be downward pressure on what the price increases would have been – around 200%. I cannot go to each individual policy because each house will be rated on the risks it has. At the time changes are made to policies, some will go down and some will go up.
The ones that come down will be as a result of the change in risk rating. With the ones that go up, Allianz is working to make sure they will not go as high as they would have under TIO ...
Ms Fyles: Point made.
Mr GILES: That is the point and the benefit of partnering with the world’s largest general insurer.
Last updated: 09 Aug 2016