A promise to halve the cost of home and strata insurance in northern Australia will not be fulfilled, the new federal government says.
The CRP for northern Australian residences, strata, and small businesses, due to be implemented from July 1, was the $10 billion brainchild of the Morrison government.
It was designed to correct a market failure that has seen northern Australian home owners pay premiums up to 20 times the cost of insuring a home in Sydney or Melbourne.
During the federal election campaign, the former government said the reinsurance pool would offer savings of up to 46 per cent for home owners and 58 per cent for strata properties.
New Assistant Treasurer Stephen Jones said that the former government misled voters when he released the modelling in Townsville today.
There will be a decrease in premiums but it won't be anything in the order of the roughly 50 per cent halving that the previous government promised, according to Jones.
The cost of some premiums will go up, government warns.
The reinsurance pool is designed to cover 880,000 policies across the top of the country, but the Assistant Treasurer cautioned not every policy holder will see the same reductions.
There will be some people in some low-risk areas for whom premiums will go up, according to Jones.
The Assistant Treasurer blamed the discrepancy squarely on the former government and said the modelling should have been released before the election.
Three cyclone seasons are still there, and there is still three more seasons to come.
Margaret Shaw, Chair of the Australian Consumers Insurance Lobby, has spent the last decade campaigning for insurance savings in North Queensland.
She wants to know if the insurance companies have been given the proper ratings.
Ms Shaw doesn't believe that the benefits will flow through for some time, even though the pool is due to come into effect tomorrow.
She said that it will be implemented by insurance companies over the next 12 months as their reinsurance contracts come up for renewal.
The Assistant Treasurer warned that it could take a long time for the savings to trickle down to households.
According to Jones, the insurance policy should be written for the year 2025.
These are rolling policies. The LNP member for the North Queensland seat of Herbert, Philip Thompson, has called for insurers to implement the changes as soon as possible.
There was always going to be an implementation period, but what we hear from insurers about delays is ridiculous, Mr Thompson said.
The new government hopes that the pool will prompt the return of insurance companies who had previously walked away from the market.