ACIL calls for "urgent need" to revise the Cyclone Reinsurance Pool
ACIL calls for “urgent need” to revise the Cyclone Reinsurance Pool | Insurance Business Australia
Catastrophe & Flood
ACIL calls for “urgent need” to revise the Cyclone Reinsurance Pool
Lobby group emphasises aim for “fairness”
Catastrophe & Flood
By
Jonalyn Cueto
In a news release, the Australian Consumers Insurance Lobby Inc (ACIL) has expressed concerns over Northern Australia residents subsidising free cyclone coverage for southern parts of Australia despite having a history of cyclones or the potential for future cyclones with changing weather patterns.
“Our aim is to ensure that the North, already grappling with exorbitant insurance premiums, is not subsidising free coverage for southern regions of Australia that could have a claim,” Tyrone Shandiman, chairperson of ACIL.
Premiums under the Cyclone Reinsurance Pool
In ACIL’s report titled “Under the Lens: ACIL’s First Evaluation of the Cyclone and Cyclone-Related Flood Reinsurance Pool”, an instance was reiterated wherein a cyclone made landfall on the Gulf of Carpentaria coast and eventually reached Sydney as a category 1 system.
“ACIL’s first evaluation of the pool presents a ‘needs improvement’ verdict. The pool, as it stands, is observed to offer limited to no substantial savings for consumers. This assessment highlights a gap between the intended benefits and the actual impact experienced by those it aims to protect,” the report said.
In the news release, ACIL highlights “even though category 1 cyclone events are unlikely to cause significant wind damage, the potential for substantial water damage claims resulting from leaking roofs and buildings underscores the critical need to properly account for such occurrences.”
The Cyclone Reinsurance Pool provides coverage for cyclone events to eligible buildings Australia-wide. However, not all policyholders are required to pay premiums.
“Sydney gets cyclone cover for free, even with its history of cyclone events, leaving North Queensland and Northern Australia to foot the bill. This isn’t a matter of North vs South – it’s about fairness,” said Shandiman. “If a cyclone were to strike Sydney once more and the city accessed funds from the Cyclone Reinsurance Pool without making any contributions, it would undoubtedly spark outrage in Northern Australia.”
The lobby group met with the Assistant Treasurer Stephen Jones and the Joint Select Committee Members for Northern Australia. ACIL said: “Regrettably, the initial meeting did not result in a receptive response from the Assistant Treasurer, underscoring the necessity for heightened advocacy and increased awareness regarding this issue.”
It is now calling on the Federal Government and the Australian Reinsurance Pool Corporation to take action on the urgent need to revise the modelling under the pool.
Have thoughts about this call to action from the lobby group? Leave your comments below.
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