Cyclone Reinsurance Pool inquiry report released

The Federal Government has released its first report into the Inquiry into the Cyclone Reinsurance Pool.  

The report comes after the Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services referred an inquiry into the operation and implementation of the Cyclone Reinsurance Pool to the Joint Select Committee on Northern Australia in October 2022.  

The Joint Select Committee on Northern Australia is responsible for the scrutiny and oversight of the work of executive government related to Northern Australia. 

The Committee’s interest in conducting an inquiry into the pool arose because of concerns about: 

• the implementation of the pool to date; 
• the reasons for a slow initial take up of the pool by insurers; 
• why the pool appears to not yet have reduced insurance premiums for many consumers despite this being its key objective; and relatedly 
• community expectations about the extent and timeframe of the anticipated premium reductions. 

The report has outlines seven main recommendations: 

Recommendation 1: 4.16 The Committee recommends that the Australian Government ensure that future releases of modelling are provided well in advance of key dates in the ongoing roll-out of the Cyclone Reinsurance Pool. 

Recommendation 2: 4.28 The Committee recommends that the Australian Government review: 

• the availability and coverage of insurance in Northern Australia, specifically the insured versus the uninsured, including non-participation; and 

the impact of the 48-hour clause on the cost of insurance premiums for Northern Australians, and the availability of insurance in the region as part of the built-in review in 2025, and adjust this clause if necessary.

Recommendation 3: 4.33 The Committee recommends that the Australian Government direct the Australia Competition and Consumer Commission to monitor the cyclone insurance markets in Northern Australia, and report on: 

• instances where thin markets may be impacting both insurance coverage and cost; and 
• market participation, specifically under-insurance and the issue of lack of insurance in some areas. 

Recommendation 4: 4.36 The Committee recommends that the Australian Government announce a position on the inclusion of marine insurance in the Cyclone Reinsurance Pool. 

Recommendation 5: 4.42 The Committee recommends that the Australian Government facilitate a coordinated approach to land use planning, building codes, mitigation and disaster resilience that includes the National Emergency Management Agency and other levels of government. 

Recommendation 6: 4.44 The Committee recommends that the Australian Government’s 2025 review of the Cyclone Reinsurance Pool consider: 

• evidence and data on whether to ‘sunset’ the Cyclone Reinsurance Pool’s coverage of policies for new builds past a certain date; and
• how to reinforce the policy objective of the Cyclone Reinsurance Pool to move to parity of cost and access for all Australians. 

Recommendation 7: 4.53 The committee recommends that future reviews of the Cyclone Reinsurance Pool consider the sum insured limit under the business property policy. 

A copy of the report is available at Inquiry into the Cyclone Reinsurance Pool – Parliament of Australia (aph.gov.au)