Several consumer advocacy groups in Australia – including the Australian Consumers Insurance Lobby Inc (ACIL), the Unit Owners Association of Queensland (UOAQ), the Owners Corporation Network of Australia (OCN), and the NQ Strata Action Group – have collectively submitted a formal request to the Insurance Council of Australia (ICA), seeking clarification regarding the apparent lack of insurance coverage available in Northern Australia, despite the establishment of the Cyclone Reinsurance Pool (pool).
Implemented as of December 31, 2023, the pool mandated large insurers to participate, with the aim of providing affordable insurance options in regions prone to cyclones. However, notable strata insurers like Chubb, SUU (CGU), SCI (Allianz), and Longitude (Chubb) have continued to refrain from offering quotes for new policies in the Northern region, it was stated.
Consequently, there has been a discernible shortage of insurance coverage, particularly affecting properties valued over $5 million, and more severely impacting those valued over $20 million due to a limited pool of available insurers.
Consumer groups have highlighted that certain property categories, such as older constructions and buildings with specific architectural features like tile roofs, are still encountering significant challenges in obtaining insurance coverage despite meeting the eligibility criteria under the pool. This situation has exacerbated the existing market shortfall within the strata sector in Northern Australia, it was suggested.
The coalition of consumer groups emphasised the essential role of insurers in averting market failures.
The groups stressed the importance of insurance companies taking reasonable measures to ensure accessible and affordable insurance options. The continued reluctance to provide quotes following the implementation of the pool raises significant concerns about insurers’ commitment to acting in accordance with the pool and addressing the market challenges faced by consumers, it was claimed.
Tyrone Shandiman, of Australian Consumers Insurance Lobby Inc, noted significant premium reductions, in some instances 50%, for insurance renewals on large strata buildings insured through the Cyclone Reinsurance Pool.
“This indicates that the Cyclone Reinsurance Pool is successfully reducing premiums for such buildings. However, the reluctance of insurers to provide quotes for new policies, despite having access to this pool, remains a point of confusion for consumers. The pool’s introduction has changed the landscape of reinsurance limitations, and we are eager to understand why insurers are still hesitant to offer insurance in this new environment,” he said.
Bob Boundy, treasurer of UOAQ, added: “As a committee member of a body corporate in the Whitsundays, we find ourselves with no other option than to secure insurance from an international provider with premiums that are tenfold higher than those typically seen in South East Queensland. Despite the introduction of the Cyclone Reinsurance Pool, which we hoped would broaden our choices and reduce costs, the anticipated benefits have yet to be realised.”
In other news, the ACIL has urged the government to immediately address the Australian Competition and Consumer Commission’s (ACCC) findings regarding the pool, rather than wait for the 2025 review.
