ACIL calls for Cyclone Reinsurance Pool overhaul

ACIL calls for Cyclone Reinsurance Pool overhaul | Insurance Business Australia

Catastrophe & Flood

ACIL calls for Cyclone Reinsurance Pool overhaul

Premium disparities highlighted

Catastrophe & Flood

By
Roxanne Libatique

The rates, released by the Australian Reinsurance Pool Corporation (ARPC), fail to resolve the long-standing differences in insurance costs between Northern Australia and other regions, according to the lobby group.

ACIL chairperson Tyrone Shandiman claimed that there is still a significant disparity in home and strata insurance premiums between regions north of the Tropic of Capricorn and the rest of the country.

“This disparity unfairly burdens Northern Australian residents,” he said.

Concerns over Cyclone Reinsurance Pool’s current framework

Although ACIL recognises that ARPC is operating within the Treasury Department’s framework for the pool, it is advocating for a comprehensive review of the current structure, which it views as flawed.

A key issue raised by the lobby group is the absence of contributions to the Cyclone Pool from residents in areas south of Port Macquarie, including Sydney, leaving Northern Australians to cover these areas.

“This is despite historical data showing that cyclones have impacted Sydney in the past,” Shandiman said.

ACIL noted historical records showing that cyclones impacted New South Wales, including Sydney, about once every two years between the 1940s and the 1970s, with 16 cyclones recorded during that period. These storms were linked to the Interdecadal Pacific Oscillation (IPO), a weather pattern that recent research suggests could return.

Warmer sea temperatures recorded off Sydney’s coast in autumn 2024, driven by the East Australian Current, also indicate a possible increased cyclone risk for New South Wales.

Despite these concerns, regions south of Port Macquarie are exempt from contributing to the pool, which ACIL argues creates an unfair distribution of risk and financial responsibility.