Suncorp CEO calls for tax reform to cut insurance premiums
Suncorp chief executive Steve Johnston has called on the government to make insurance tax-free to reverse soaring premiums caused by repeated natural disasters as the insurer takes control of its lines supply in the face of rising inflation.
The East Coast floods exposed the creeping crisis of insurance affordability in communities affected by extreme weather, with thousands of uninsured people struggling with how to rebuild their homes.
Mr Johnston denounced the current approach to insurance taxation and called for reform, saying GST, stamp duty and emergency services tax account for between 30 and 45 per cent of premiums sold in the Queensland and NSW.
“It seems to be the most inefficient use of taxes and charges and leads to and makes affordability problems worse,” he said. “There is a strong correlation between low-income communities and flood risk.”
Mr Johnston said the tax burden that came on top of insurance premiums created a “huge disincentive” for Australians to take out home insurance. “If these taxes were removed, it would immediately create a more affordable insurance market.”
Insurers have received more than 126,000 claims so far from the East Coast flood crisis and the Insurance Council of Australia has warned that labor and material shortages could delay the recovery process.
The COVID-19 pandemic had already created supply chain blockages and growing demand from builders and rising inflation combined to create a unique set of challenges. Suncorp chief operating officer Paul Smeaton said the insurer was fending off inflationary pressures by bulk buying building materials across the country.
“We recently rolled out bulk buying. Previously, we relied on the purchasing power of builders. We now buy nationally,” he said. “We recently renegotiated the paint, roofing, flooring and waste categories, which are pretty handy categories to buy in bulk when we prepare for this flood.”
Mr Johnston reiterated his support for an overhaul of planning laws as part of a national discussion on building permits issued to disaster-prone areas. He said current regulatory processes for new developments were inadequate.