Darwin provides a useful reference. Strata development has been providing more than half of the city’s
growth in housing supply for at least a decade with apartments accounting for 57 per cent of Northern
Territory building approvals in the year to October 2011. Recent announcements regarding the expansion of
the United States military presence in Darwin suggest demand will increase further. Relatively speaking, new development in northern Queensland and WA is at a standstill yet they have similar needs in a relatively
transient population and mobile workforce.
Darwin, however, has the benefit of the Territory Insurance Office (TIO), a statutory agency with a specific
mandate to ensure insurance is available in the Territory. Its mission statement is simply:
“Helping build confidence and resilience in the Territory”
Backed by an extensive but tailored reinsurance program, TIO operates profitably and on fully commercial
lines in every respect except that its government guarantee substitutes for private prudential capital. While
strata insurance remains expensive relative to southern capitals, it continues to be quoted at levels well below
those now on offer in north Queensland and northern WA and with no material recent changes in price levels
or restrictions on coverage.
In most respects the TIO mirrors the State insurance offices that in every other instance have been privatised
in recent decades. On occasions the Northern Territory Government has considered and rejected the option
of a similar privatisation because of concerns about the impact on availability and affordability of insurance in
the NT. Based on recent experience in strata insurance the rest of tropical Australia, it would appear these
concerns were well founded.
The TIO differs from the other former State insurance offices in another important respect. The Northern
Territory is not a State, and the TIO therefore is not a provider of “State insurance” within the literal meaning
of s51(xiv) and thus not beyond the Commonwealth’s jurisdiction. Indeed, it could be seen as a delegated
instrument of Commonwealth authority to the extent that the NT is ultimately governed by Commonwealth
Australian Reinsurance Pool Corporation
Another example of effective government intervention to stabilise insurance markets, the ARPC was
established following the collapse of the global market in reinsurance cover for terrorism following the World
Trade Centre attack in 2001. It provides reinsurance against terrorism for eligible insurance contracts, which
include most forms of property but exclude residential property, including strata buildings. In SCA’s view this
exclusion is anomalous given that many larger central city buildings may face similar levels of terrorism risk to
commercial buildings. If they did suffer an attack, the individual owners would suffer the loss.
A decade later, the ARPC has raised in excess of its original premium pool target of $350 million, holds a $2.75
billion retrocession cover and a Commonwealth guarantee of a further $10 billion to give a total protection of
$13.1 billion. This facility has yet to be called o