The Australian Reinsurance Pool Corporation (ARPC) has welcomed the fourth insurance monitoring report from the Australian Competition and Consumer Commission (ACCC). The report has also confirmed that premium savings are being delivered to households and small businesses (SMEs) in medium to high cyclone risk regions.
The findings mark reductions since insurers joined the cyclone pool (as measured on a per A$100,000 ($65,600) sum insured basis):
- Average home and contents insurance premiums in medium to high cyclone risk areas decreased by 11% compared to premiums before the cyclone pool took effect.
- Premium reductions were most prominent in coastal areas of north Western Australia and north Queensland.
- Average SME premiums in medium to high cyclone risk areas decreased by 24% after insurers entered the pool.
- Average strata insurance premiums reduced by 7% in medium to high cyclone risk regions.
The report also confirmed that reinsurance costs have decreased in northern Australia while remaining stable or increasing in the rest of Australia, demonstrating the pool is working as designed to provide targeted support to cyclone-prone regions.
“We welcome the ACCC’s independent findings that the cyclone pool is achieving its core objectives. The results reflect meaningful progress in policyholder outcomes across northern Australia,” said ARPC chief executive Christopher Wallace.
The ACCC report highlighted broader market pressures as well, noting that factors including extreme weather and rising construction costs continue to impact premium levels, and that overall insurance affordability remains a critical challenge.
The report pointed out observations about limited risk mitigation uptake, too.
“The cyclone pool is one lever to improve affordability outcomes for medium to high-risk cyclone areas,” said Dr Wallace.
“We urge all insurers to continue recognising and rewarding mitigation efforts, such as cyclone shutters and reinforced roofing.”
As the cyclone pool continues to mature, ARPC will focus on enhancing its data analysis capabilities to support ongoing improvements in pricing and risk assessment.
The report provides comprehensive analysis of the pool’s performance since all eligible insurers joined by the statutory deadline of 31 December 2024, representing the first complete assessment of the pool’s impact across the insurance market.
ARPC remains committed to working with insurers to improve awareness and implementation of cyclone risk reduction measures. The recently introduced strata mitigation discounts represent an important step in expanding these incentives for risk mitigation.