The Kimberley insurance market is best described as dysfunctional and in some parts of the region constitutes a “failed market”. Accelerating insurance premium growth, coupled with a decline in the number of insurers in the region, indicates further deterioration since the 2020 Northern Australia Insurance Inquiry and subsequent implementation of the Cyclone Reinsurance Pool.

Online surveys, stakeholder interviews, insurance quote comparisons, case studies, and a cost benefit analysis have been undertaken to inform this review.

Highlighted findings include:

• Cyclone risk does not appear to be the predominate driver of insurance premium increases in the Kimberley. Small and dispersed population; a high proportion of government and employer housing; high construction and asset replacement costs; a small construction workforce; and volatile supply chains presents a capacity risk to the private insurance sector to respond to a major insurable event in a timely and appropriate manner in the Kimberley.
• A lack of choice and affordability of insurance represents critical constraints on the Kimberley economy and is resulting in perverse and sub-optimal decisions being made by households, businesses and organisations to manage risks. This includes:
• Partial insurance coverage (through cover reduction or underinsurance).
• Organisation restructuring (with associated costs) or reduction in scope of services.
• The use of alternative risk management mechanisms (such as parametrics).
• Self-insurance (which in most cases is foregoing insurance entirely).
• Off-shore insurance (businesses needing to travel outside of Australia to secure necessary insurance coverage for operations).
• Along with the Pilbara, Kimberley premiums were higher than other parts of northern Australia and more than four times that of Perth. A move to see the Kimberley insurance market return over time to a more appropriate premium level (i.e. twice Perth average) would generate significant economic and social benefits: generating between $150 and $300 million of benefits (present value) over the next 20 years for the community and economy of the region.

The Kimberley Insurance Review proposes twelve recommendations for further investigation. The recommendations specifically range from the establishment of a public owned baseline insurer to service remote locations and those not fully serviced by the existing commercial insurance market; a review of financial arrangements in existing government contracts relating to insurance coverage; and extend to investigating the potential delivery of insurance coverage for community organisations in the Kimberley region similar to the Victorian Managed Insurance Authority’s Community Service Organisation Insurance Program initiative.

The Summary and full Technical Report can be downloaded from the RDA Kimberley website:

https://www.rdakimberley.com.au/business-development/kimberley-insurance-review/