Premier Jeremy Rockliff says Tasmania will “partner with insurers, brokers, reinsurers” to fix insurance affordability and availability gaps in the island state.

A new non-profit statutory authority will have a “broad mandate to oversee and support the insurance ecosystem in Tasmania”, he says.

The move marks a retreat from an election promise made last year to establish a state-owned insurer – TasInsure, backed by Tasmania’s Motor Accidents Insurance Board – to tackle what the government said were mainland-inflated premiums.

Insurers have welcomed today’s announcement.

“The government has listened and is prepared to work in partnership with industry to implement practical and effective solutions to insurance challenges,” RACT group CEO Mark Mugnaioni said.

“The critical next step is ... deep collaboration with industry experts. It is particularly encouraging that the government has adopted a partnership-first approach, with direct government intervention reserved only where private market solutions are not viable.”

The change comes after industry consultant John Trowbridge was appointed to examine the TasInsure proposal.

The Insurance Council of Australia has welcomed the industry collaboration commitment but notes the latest TasInsure Implementation Plan includes market intervention for hard-to-insure risks where “existing market settings are not delivering adequate outcomes”.

“TasInsure will step in where the market fails and will focus on long-term affordability by addressing risk, prevention, resilience and increasing competition,” Mr Rockliff said.

ICA says it is unclear how this function will operate.

“The government flagged today that it may intervene in the insurance market. However, it is unclear how it will do this without establishing a standalone insurer, providing subsidies to target sectors or mandating insurance pricing – all of which have significant fiscal or market risks,” ICA said.

ICA CEO Andrew Hall says Tasmania has a strong, competitive insurance market, with consumers and businesses able to access cover from a wide range of providers.

“Approaches that seek to artificially drive down insurance prices without addressing the underlying risks have been proven to be costly for taxpayers and only drive up insurance prices,” he said.

ICA wants more investment in resilience, removal of taxes on insurance and changes to civil liability settings.

These are “within the power of the Tasmanian government to change without the establishment of a new authority”.

Removing stamp duty from insurance would save Tasmanian households $161 million this year, ICA says, while abolition of the fire services levy would save businesses $110 million.

It also says $46 million invested in extreme weather risk reduction in Tasmania would return $940 million in benefits by 2050.