When the 2025 NIBA-Vero National Young Broker of the Year visited Bloomfield in Far North Queensland in late 2025, he found a community financially exposed by what was missing. Many residents either had no cover at all or lacked flood cover that could respond to the event that actually hit them. When the water took their houses, it effectively wiped out their wealth. New data from the Australian Reinsurance Pool Corporation (ARPC), published August 12, puts a number on how widespread that exposure is – and where it is most acute.
ARPC’s analysis of residential insurance participation across cyclone-exposed regions – drawn from insurer data submitted through the Cyclone Reinsurance Pool and cross-referenced with address, census, and land title records – finds that flood insurance take-up falls sharply as flood risk rises. Among properties identified as carrying flood risk across Queensland, Western Australia, the Northern Territory, and northern New South Wales, Home Buildings flood insurance take-up sits at 65%. In the highest-risk band – the top 2.5% of flood-exposed properties nationally – that figure drops to 33%. For Home Contents, flood cover in extreme-risk areas falls to just 23%.
The ICA's 2024-25 Insurance Catastrophe Resilience Report puts direct figures behind that gap. Of the 242,000 homes facing severe to extreme flood risk, approximately 77% do not have flood cover. Around 70% of these households are in areas where the median income falls below the national median, and approximately 35% are in areas where the median income falls below the poverty line. Currently, extreme weather events cost Australians around $4.5 billion annually, with flood identified as the nation’s most costly and predictable peril. Around 1.36 million properties are at risk of flooding, with 298,000 facing severe to extreme risk. For brokers, the coverage gap is not an abstract policy concern. Clients who can afford flood cover but have opted out represent a qualitatively different advisory challenge from those who genuinely cannot afford it.
Compounding the participation gap is a less-discussed coverage gap created by how flood and storm surge are defined and structured across the market. Under the Insurance Contracts Act 1984, “flood” has a prescribed definition covering water that escapes or overflows from specified watercourses and other bodies of water and inundates normally dry land. Storm surge is treated separately from this statutory flood definition, although insurers may provide storm-surge cover under their policies.
ARPC’s review of insurer Product Disclosure Statements, based on data as of June 30, 2025, found that while 87% of Home Buildings policies include flood cover, only 63% include storm surge cover – and the way cover is structured varies across the market, from default inclusion to optional opt-out to active add-on. For brokers, the practical problem is a client may assume “flood” means any major water damage. However, a policy that covers flood may split a flood event into flood, storm, rainwater run-off, storm surge, or action of the sea. By the time those distinctions become important, the property is usually already damaged, and the relationship risk has shifted to the broker.
A general insurance broker holding an Australian Financial Services Licence (AFSL) must provide financial services efficiently, honestly, and fairly – and the National Insurance Brokers Association (NIBA) Code of Practice requires brokers to act honestly and with integrity in all dealings. Where a client in a cyclone-exposed area holds a policy that excludes storm surge and that exclusion has not been clearly communicated, the broker’s position at claim time is exposed.
The ARPC findings land in a market where the Cyclone Reinsurance Pool has delivered measurable premium reductions in higher-risk areas, but participation and affordability remain unresolved. The Australian Competition and Consumer Commission’s (ACCC) fifth and final insurance monitoring report, released in June 2026, found that average home building and contents insurance premiums in medium to high cyclone-risk areas fell 11% in the first year after insurers joined the pool, measured per $100,000 of sum insured – but the average premium in 2024-25 remained almost $5,000 in north Western Australia, over $3,500 in the Northern Territory, and more than $3,100 in north Queensland.
The Australian Prudential Regulation Authority’s (APRA) March 2026 Insurance Climate Vulnerability Assessment (Insurance CVA) found around one in seven Australian households are currently uninsured, with the proportion projected to rise to around one in four by 2050 – equivalent to an additional one million households without home insurance protection, with regional and rural communities expected to be hit hardest.
The ARPC data shows that shortfalls are not evenly spread. Overall Home Buildings take-up across cyclone-exposed regions stands at 91%, with Home Contents at 62% – a 29-percentage-point gap that widens in lower-income, higher-hazard, and more remote communities. Home Contents take-up in the lowest economic resource areas is approximately 36% below that of the highest-resource communities. The NT records the lowest regional contents take-up at 45%.
The Insurance Council of Australia’s (ICA) 2024-25 report identifies a direct correlation between high flood risk and socioeconomic disadvantage, noting that high-risk land is often cheaper, with lower property values creating higher concentrations of lower-income households in these locations, with limited ability to relocate or invest in mitigation. ARPC CEO Dr. Christopher Wallace said the analysis provides a data-driven foundation for understanding where resilience gaps are most pronounced. “While participation remains strong overall, the report shows that it is not evenly distributed. Understanding where participation is lower, and the factors associated with it, helps identify where resilience challenges may be more pronounced,” Wallace said.
The ARPC report is explicitly descriptive and does not establish whether low flood take-up in high-risk areas reflects price sensitivity, product complexity, or gaps in the advice process. But the granularity of the data – presented at Local Government Area level – gives brokers a clearer picture of where coverage conversations are most likely to matter. Brokers servicing clients in cyclone, flood, and bushfire zones should ensure sums insured are current and policy wordings are unambiguous ahead of the 2026-27 summer season. Given that storm surge cover is not consistently available across the market, and that its absence is not captured by the standard regulatory flood definition, it warrants explicit discussion at renewal – particularly for clients in coastal and cyclone-exposed areas where the ARPC data now shows coverage gaps are most acute.
