ICA applauds release of reinsurance pool modelling data

The ICA has issued a statement welcoming the release of the modelling data used by the previous government to design the cyclone reinsurance pool, calling it a move “to bring full transparency” to the scheme. The modelling data reveals the impact the reinsurance pool is likely to have on premiums across Northern Australia, where residents are especially vulnerable to worsening extreme weather impacts and for whom the reinsurance pool was constituted.

The report disclosed that up to 24% of residential home policy holders in Queensland with minimal cyclone risk would see premium increases – some greater than 20%. The modelling also estimated that only five small business and four strata corporations in the region would receive the highest premium reductions.

While ICA has not yet validated ARPC’s modelling, ICA emphasized that changing building standards and land-use planning, investing in mitigation and resilience, and removing state taxes on insurance offered a more sustainable path to reducing premiums in the long run. ICA praised the Albanese government’s annual $200 million commitment under its Disaster Ready Fund as an example.

The cyclone reinsurance pool gave large insurers until yearend 2023 and small insurers until 2024 to have all cyclone-risk reinsurance contracts in the pool – meaning North Australians would only expect an impact on their premiums once their insurers had moved their policies into the pool.

“Insurers have been concerned that consumer expectations around premium decreases were never going to be met through this scheme, so today’s release has provided transparency for the first time,” said ICA CEO Andrew Hall. “Ultimately, this data highlights that driving sustainable relief to people’s premiums will require long-term co-ordinated investment across a range of measures from all levels of government…. [A] more resilient built environment and smarter land planning decisions will be the key to insurance affordability and availability in Northern Australia.”