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senate vote 2022-03-30#5
Edited by
mackay staff
on
2022-04-01 15:51:39
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Title
Bills — Treasury Laws Amendment (Cyclone and Flood Damage Reinsurance Pool) Bill 2022; in Committee- Treasury Laws Amendment (Cyclone and Flood Damage Reinsurance Pool) Bill 2022 - in Committee - Flood damage
Description
<p class="speaker">Nick McKim</p><p>by leave—I move Australian Greens amendments (1) to (33) on sheet 1559 standing in my name, together:</p>-
- The majority voted against [amendments](https://www.openaustralia.org.au/senate/?gid=2022-03-30.35.2) introduced by Tasmanian Senator [Nick McKim](https://theyvoteforyou.org.au/people/senate/tasmania/nick_mckim) (Greens), which means they failed.
- ### What do these amendments do?
- Tasmanian Senator [Nick McKim](https://theyvoteforyou.org.au/people/senate/tasmania/nick_mckim) (Greens) [explained that](https://www.openaustralia.org.au/senate/?gid=2022-03-30.35.2):
- > *If passed, these amendments also mean it would be less administratively burdensome, because the amended bill wouldn't require insurers to distinguish between the risk of non-cyclone-related floods and the risk of cyclone related floods, and it wouldn't require them to seek private market insurance for non-cyclone-related floods. In other words, all reinsurance for all flood damage would be covered under this scheme.*
<p class="italic">(1) Title, page 1 (line 2), omit "related", substitute "flood".</p><p class="italic">(2) Schedule 1, heading, page 3 (line 2), omit "related", substitute "flood".</p><p class="italic">(3) Schedule 1, item 1, page 3 (line 8), omit "<i>Cyclone</i>", substitute "<i>Natural Disaster</i>".</p><p class="italic">(4) Schedule 1, item 1, page 3 (line 11), omit "<i>Cyclone</i>", substitute "<i>Natural Disaster</i>".</p><p class="italic">(5) Schedule 1, item 1, page 3 (after line 18), after section 127F, insert:</p><p class="italic">127G Civil penalty for contravening section 8AA of the <i>Terrorism and Natural Disaster Insurance Act 2003</i></p><p class="italic">A person commits a separate contravention of this section for each calendar year during all or part of which the person fails to comply with subsection 8AA(1) of the <i>Terrorism and Natural Disaster Insurance Act 2003</i>.</p><p class="italic">Note: That subsection requires most general insurers to reinsure specified flood risks with the Australian Reinsurance Pool Corporation. It also applies to syndicates of Lloyd's underwriters, and to unauthorised foreign insurers, who choose to reinsure such risks with the Corporation.</p><p class="italic">Civil penalty: 1,000 penalty units.</p><p class="italic">(6) Schedule 1, item 2, page 3 (lines 20 and 21), omit the item, substitute:</p><p class="italic">2 Title</p><p class="italic">After "acts,", insert "cyclone damage and flood damage,".</p><p class="italic">(7) Schedule 1, item 3, page 3 (line 25), omit "Cyclone", substitute "<i>Natural Disaster</i>".</p><p class="italic">(8) Schedule 1, item 5, page 4, omit the definition of <i>cyclone reinsurance contract</i> in section 3, substitute:</p><p class="italic"><i>cyclone or flood reinsurance contract</i> means a contract of reinsurance that the Corporation enters into as reinsurer under Part 2A.</p><p class="italic">(9) Schedule 1, item 5, page 4, omit the definition of <i>cyclone reinsurance scheme</i> in section 3, substitute:</p><p class="italic"><i>cyclone and flood reinsurance scheme </i>means:</p><p class="italic">(a) the scheme operated by the Corporation in performing its function under paragraph 10(b) (cyclone and flood damage reinsurance); and</p><p class="italic">(b) any other activities the Corporation undertakes for the purposes of performing that function.</p><p class="italic">(10) Schedule 1, item 5, page 4 (after line 29), after the definition of <i>eligible cyclone loss</i> in section 3, insert:</p><p class="italic"><i>eligible flood loss </i>means a loss arising from a flood (as defined by subsection 34(1) of the <i>Insurance Cont</i><i>racts Regulations 2017</i> for the purposes of paragraph 37B(2)(a) of the <i>Insurance Contracts Act 1984</i>), other than a flood caused by a weather system in relation to which a cyclone event is declared under subsection 8F(1).</p><p class="italic">(11) Schedule 1, item 9, page 6 (line 11), omit "related".</p><p class="italic">(12) Schedule 1, item 9, page 8 (after line 17), after section 8A, insert:</p><p class="italic">8AA When flood risks must be reinsured with the Corporation</p><p class="italic">(1) If a general insurer carries on insurance business that includes undertaking liability, under pool insurance contracts, in respect of eligible flood losses, the insurer must maintain contracts of reinsurance with the Corporation that:</p><p class="italic">(a) cover the insurer's liability, under all pool insurance contracts that it enters into, in respect of all eligible flood losses; and</p><p class="italic">(b) insure against 100% of the insurer's liability, under each of those pool insurance contracts, in respect of all eligible flood losses.</p><p class="italic">Note: A pecuniary penalty may be imposed for a contravention of this subsection: see section 127G of the <i>Insurance Act 1973</i>.</p><p class="italic">(2) Subsection (1) has effect subject to a direction that is in force under section 38 and provides for the extent to which risk is to be retained by reinsureds under the relevant contracts of reinsurance.</p><p class="italic">(3) Subsection (1) has effect even if the general insurer has entered into a contract of reinsurance otherwise than with the Corporation.</p><p class="italic">(4) The Corporation may enter into contracts of reinsurance that insure against the reinsureds' liability, under pool insurance contracts, in respect of eligible flood losses arising on and after 1 July 2022.</p><p class="italic"> <i>Exception where premium income is below prescribed threshold in previous financial year</i></p><p class="italic">(5) Subsection (1) does not apply to a general insurer during a calendar year if the amount worked out under subsection (6) does not exceed the threshold amount prescribed by the regulations.</p><p class="italic">(6) For the purposes of subsection (5), the amount is the total gross written premiums that the reporting standard prescribed by the regulations for the purposes of this subsection would require the general insurer to report to APRA:</p><p class="italic">(a) in respect of the last financial year of the general insurer that ended before the start of the calendar year referred to in subsection (5); and</p><p class="italic">(b) for a class of direct business consisting of contracts of insurance:</p><p class="italic">(i) that the general insurer enters into as insurer; and</p><p class="italic">(ii) that are wholly or partly pool insurance contracts; and</p><p class="italic">(iii) under which the insurer undertakes any liability in respect of eligible flood losses (whether or not the contracts cover other risks) other than eligible flood losses arising at a place covered by a determination in force under subsection (7);</p><p class="italic">if such contracts were a distinct class of direct insurance business.</p><p class="italic">(7) The Corporation may, by notifiable instrument, determine areas where, in its opinion, the risk of eligible flood losses arising is so small as to be negligible.</p><p class="italic"> <i>One in, all in rule for exempt general insurer</i></p><p class="italic">(8) However, if a general insurer enters into a contract of reinsurance with the Corporation that insures against the insurer's liability under a pool insurance contract in respect of eligible flood losses, subsection (5) does not apply to the general insurer while that contract of reinsurance is in force.</p><p class="italic"> <i>How </i> <i>this section applies to a Lloyd's syndicate</i></p><p class="italic">(9) If a syndicate of Lloyd's underwriters enter into a contract of reinsurance with the Corporation that insures against their liability under a pool insurance contract in respect of eligible flood losses, then, while that contract of reinsurance is in force, subsections (1), (2) and (3) apply to:</p><p class="italic">(a) the syndicate; and</p><p class="italic">(b) each Lloyd's underwriter who is a member of the syndicate, when acting in that capacity;</p><p class="italic">in the same way as those subsections apply to a general insurer.</p><p class="italic"> <i>How this section applies to an unauthorised foreign insurer</i></p><p class="italic">(10) If an unauthorised foreign insurer enters into a contract of reinsurance with the Corporation that insures against the liability of the foreign insurer under a pool insurance contract in respect of eligible flood losses, then, while that contract of reinsurance is in force, subsections (1), (2) and (3) apply to that foreign insurer in the same way as those subsections apply to a general insurer.</p><p class="italic">(13) Schedule 1, item 9, page 11 (line 24), after "cyclone", insert "or flood".</p><p class="italic">(14) Schedule 1, item 9, page 12 (line 2), after "cyclone", insert "and flood".</p><p class="italic">(15) Schedule 1, item 14, page 15 (line 5), after "cyclone", insert "and flood".</p><p class="italic">(16) Schedule 1, item 15, page 16 (line 24), after "<i>cyclone</i>", insert "<i>and flood</i>".</p><p class="italic">(17) Schedule 1, item 15, page 17 (line 7), after "cyclone", insert "or flood".</p><p class="italic">(18) Schedule 1, item 15, page 17 (line 20), after "cyclone", insert "and flood".</p><p class="italic">(19) Schedule 1, item 16, page 18 (line 2), after "cyclone", insert "or flood".</p><p class="italic">(20) Schedule 1, item 17, page 18 (line 6), after "cyclone", insert "or flood".</p><p class="italic">(21) Schedule 1, item 18, page 18 (line 8), after "cyclone", insert "or flood".</p><p class="italic">(22) Schedule 1, item 19, page 18 (line 12), after "cyclone", insert "or flood".</p><p class="italic">(23) Schedule 1, item 19, page 18 (line 16), after "<i>cyclone</i>", insert "<i>or flood</i>".</p><p class="italic">(24) Schedule 1, item 19, page 18 (line 17), after "cyclone", insert "or flood".</p><p class="italic">(25) Schedule 1, item 19, page 18 (line 26), after "cyclone", insert "or flood".</p><p class="italic">(26) Schedule 1, item 19, page 19 (line 7), after "cyclone", insert "or flood".</p><p class="italic">(27) Schedule 1, item 21, page 19 (lines 16 and 17), omit the item, substitute:</p><p class="italic">21 Paragraph 38(2)(d)</p><p class="italic">After "insurance", insert "(except cyclone or flood reinsurance contracts)".</p><p class="italic">(28) Schedule 1, item 27, page 21 (line 2), omit "<i>Cyclone</i>", substitute "<i>Natural Disaster</i>".</p><p class="italic">(29) Schedule 1, item 27, page 21 (line 4), omit "<i>Cyclone</i>", substitute "<i>Natural Disaster</i>".</p><p class="italic">(30) Schedule 1, item 27, page 21 (line 15), omit "<i>Cyclone</i>", substitute "<i>Natural Disaster</i>".</p><p class="italic">(31) Schedule 1, page 21 (after line 21), after item 27, insert:</p><p class="italic">27A Application of section 8AA of the <i>Terrorism and Natural Disaster Insurance Act 2003</i></p><p class="italic">(1) Subsections 8AA(1) to (3) and (5) to (8) of the <i>Terrorism and Natural Disaster Insurance Act 2003</i>, as inserted by item 9 of this Schedule, apply to a general insurer from the start of:</p><p class="italic">(a) unless paragraph (b) applies—the 2024 calendar year; or</p><p class="italic">(b) if the total gross written premiums for the householders class of direct business, as reported to APRA:</p><p class="italic">(i) under the reporting standard prescribed for the purposes of subsection 8AA(6) of that Act, as so inserted; and</p><p class="italic">(ii) in respect of the last financial year of the insurer to end before 31 December 2022;</p><p class="italic">is less than $300 million—the 2025 calendar year.</p><p class="italic">(2) The following provisions of the <i>Terrorism and Natural Disaster Insurance Act 2003</i>, as inserted by item 9 of this Schedule, apply in relation to a Lloyd's underwriter or unauthorised foreign insurer from the start of the 2024 calendar year:</p><p class="italic">(a) subsections 8AA(9) and (10);</p><p class="italic">(b) subsections 8AA(1) to (3), as applying because of subsections 8AA(9) and (10).</p><p class="italic">(32) Schedule 1, item 28, page 21 (line 22), omit "<i>C</i><i>yclone</i><i>"</i>, substitute "<i>Natural Disaster</i>".</p><p class="italic">(33) Schedule 1, item 28, page 21 (line 24), omit "<i>Cyclone</i>", substitute "<i>Natural Disaster</i>".</p><p>These amendments have been circulated. I want to make it very clear that it would be more equitable for more Australians to get the benefit of cheaper insurance through a government not-for-profit reinsurance scheme, which is what these amendments propose. If passed, these amendments also mean it would be less administratively burdensome, because the amended bill wouldn't require insurers to distinguish between the risk of non-cyclone-related floods and the risk of cyclone related floods, and it wouldn't require them to seek private market insurance for non-cyclone-related floods. In other words, all reinsurance for all flood damage would be covered under this scheme.</p><p>So these amendments expand the scope of the scheme, they make it more equitable and they mean that more Australians would benefit through lower insurance premiums, which are only going keep climbing, because of the climate emergency that we are living in—the breakdown of our planet's climate—which is being turbocharged by this government. Not least of the ways in which they have turbocharged the climate emergency is in the budget they released last night, which contains about $10 billion per year to encourage the accelerated burning and extraction of fossil fuels! Make no mistake, the budget is a budget brought down by a government that is turbocharging the climate crisis.</p><p>I observe that every single dollar of those public subsidies to encourage the extraction and burning of fossil fuels is also supported by the Australian Labor Party. And what are we now about to see here in this chamber? Both major parties colluding to vote down these Greens amendments that would mean that more Australians get the benefit of a reduction in their insurance premiums as a result of nationalising reinsurance. As we move forward, we will see that more and more Australians need this benefit.</p><p>I'll conclude by making a prediction. At some stage, in the not too distant future, the Senate will be here doing exactly what this amendment does: it will be increasing the scope of this scheme until, ultimately—and this will be a great thing if it happens—this country nationalises reinsurance for all climate-related so-called natural disasters. That would mean that we nationalise reinsurance with regard to floods, with regard to rising sea levels and with regard to bushfires, and that can't happen quickly enough. It will happen one day, mark my words.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>-
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