Working together to keep insurance affordable

Dear RACT members,

You may have heard me on the radio this morning responding to yesterday’s election announcement by the Tasmanian Liberals for a state-owned insurance entity. I wanted to follow up directly with you, as our members, about this to ensure you are informed. You can listen to the radio interview here.

Your RACT

Here's what's important to remember: you (and your 220,000 fellow members) already own a Tasmanian insurance company! As a member-owned mutual organisation, we do not exist to return dividends to shareholders. RACT exists only to meet your needs, and those of your communities. We provide $50 billion in coverage each year and act as Tasmania’s shoulder to lean on when you need us most. Our mission is simple – to have a valued relationship with every Tasmanian and be your voice when it matters.

Your insurance costs

As the CEO of RACT, the increase in insurance costs for our members over the last few years is one of my biggest concerns, and I know these bills hurt your family budget.

We seek to offer insurance that addresses the risks and needs of Tasmanians including coverage for bushfire, flood and storm. We have seen an increase in the cost and complexity of insurance claims in Tasmania which is impacting premiums.

The reality is that multiple factors are driving up insurance costs across Tasmania:

More extreme weather: The past 12 years have been one of the most destructive periods on record, with more than $2 billion in community losses from events like the Dunalley bushfires and floods in Latrobe, Hobart and Launceston. Our role is to help affected communities to get back on their feet. Unless we as a community invest in preparedness, the costs of extreme weather events will continue to climb.

Higher building and construction costs: When we need to repair or rebuild your home, everything now costs significantly more – from materials to labour to compliance requirements. These increases directly impact the total amount we pay out in claims.

Government fees and charges: 20% of your premium is government taxes and duties, which add another layer of costs that gets passed on to insurance-holders through premiums.

The path forward

We can't solve this challenge with quick fixes that don't address the root causes. We can’t solve this challenge by ourselves on your behalf. And government certainly can’t solve this challenge alone. What we need is coordinated action across government, experts, industry, and the community.

But there is real hope. Evidence shows that the more we prepare and invest in protective measures, the more sustainable we will be, and the less everybody’s insurance will cost. We can't control the weather, but we can control how we prepare for it.

Our commitment to you

When we surveyed you earlier this year, you told us that you were concerned about the costs and impact of increasing bushfires and storms. Over the last 18 months, we've been working with local, global, and industry experts (many of whom live right here in Tassie) to understand and develop lasting solutions. As Tasmania's only local insurer, we're committed to partnering with the incoming government to address these urgent challenges to Building Resilient Communities.

We're calling on all Tasmanian politicians – Liberal, Labor, Greens, and Independents – to work with us as your Club and the acknowledged experts on Tasmanian risk. None of us can solve this alone, but we can absolutely solve it together.

Thank you for your continued trust and membership.

- Mark Mugnaioni, Group Chief Executive Officer