Experts Back Bligh on Insurance
The government is seeking expressions of interest for insurers willing to put the massive state of the assets to hedge against disasters that seem to come faster and faster. When the government last shopped around in 2004, the cost was considered priceless. But the prime minister said that unless the state receives a value-for-money quote that includes roads, it will stick with self-insurance. Queensland pays its share of the 5.8 billion U.S. dollars for flood and cyclone damage bill with the proceeds of a coal terminal lease, but also put money aside in the budget for disasters.
Prof. Quiggin said self-insurance is also questionable, because the governments more money stored away, the more likely they may draw on any resources for other crises, such as recession or war. Queensland University of Technology Professor Tim Robinson agreed.
The head of the school of the University of Economy and Finance said he could see some good reasons for the government to the reinsurance market. But there were problems with self-insurance, too. They have to actually put money aside and politicians can not necessarily be trusted to keep their filthy hands off them. But the risk with insurance in the private sector, The industry would say we are spread risk, but if there is a huge disaster here, and then say, an earthquake in California one week later.
