July has opened wet across southern and eastern Australia. Successive winter cold fronts flooded roads and homes across South Australia in the first days of the month, dropping about 70% of Adelaide's median July rainfall in a single day. A coastal low lashed the New South Wales coast with more than 200 millimetres at Ulladulla and last weekend severe-weather warnings were only just being stood down.
Once again, the peril testing communities this month is flood and while the government's reinsurance pool – the Cyclone Reinsurance Pool (CRP) – covers cyclones, it leaves standalone flood, the country's worst affordability problem, outside the scheme. This insurance challenge is live again in the wake of a new report and Treasury's current statutory review of the pool.
That question sits at the heart of an Australian Reinsurance Pool Corporation (ARPC)-backed report by the University of Queensland (UQ): Building Resilience: Linking Disaster Insurance and Risk Mitigation for a Sustainable Future. It stopped short of prescribing a flood pool for Australia but it put flood squarely backl in frame. There is no fully private model for disaster cover, the authors argued: Government is already the insurer of last resort, so the real question is not whether the public sector shares the risk, but how much. The report's central case study is the United Kingdom's Flood Re, a government-legislated scheme that cross-subsidises high-risk households through a levy on every home policy - precisely the kind of solidarity pricing a flood pool would rely on.
Its warning, though, lands on both sides of the argument: Transferring risk does not reduce it. Solidarity pricing becomes unaffordable as more homes turn high-risk unless physical mitigation lowers the underlying exposure, the report said. A flood pool, on that reading, is a bridge rather than a cure. So the real question is not whether the public sector shares the risk, but how much. Citing Deloitte Access Economics, UQ projected natural disasters will cost Australia at least $73 billion a year by 2060.
However, on the public record, only one major insurer - Allianz - has ever backed the idea of a government funded pool to cover flood.
When Insurance Business pressed the Insurance Council of Australia (ICA) last week on whether the cyclone reinsurance pool should be widened to take in flood more broadly, the ICA declined to be drawn, falling back on the industry's long-standing case for mitigation. "The rising cost of disasters is a shared challenge, and the only sustainable way to keep communities safe and improve insurance affordability is to reduce the underlying risk," said a spokesperson to IB.
The ICA is not opposed to pooling in principle - it accepts reinsurance pools can be part of the solution - but it has consistently resisted widening this one. Its preferred remedy is physical: A $30.15 billion Flood Defence Fund, jointly funded by the Commonwealth and the states, to build levees and other protections rather than subsidise premiums.
In the ICA's submission to Treasury's review of the cyclone pool, the peak body did directly address the question of expanding the pool. "We caution against any expansion that may inadvertently obscure critical risk signals which serve to discourage development in high-risk areas," said the submission. "Any consideration of broadening the scope of the CRP would likely result in a significant transfer of risk from the private market to the Government balance sheet."
The ARPC has run the cyclone pool since 2022, and average home premiums in the highest cyclone-risk areas have fallen 37% since it began, according to the corporation - evidence that the cyclone pool has cut premiums in high-risk areas. That cyclone-related flood cover, though, runs only for a 48-hour window around a declared cyclone - a narrow door that leaves most of the nation's flood exposure on the wrong side of it. The ICA estimates 1.36 million properties face some level of flood risk and it recorded $4.8 billion in insured losses from extreme weather in 2025 - up more than 700% on the prior year. Consumer advocates, meanwhile, point to homeowners in exposed areas quoted flood premiums above $20,000 a year.
The flood-pool idea enjoyed renewed attention during the 2022–2024 cycle of parliamentary inquiries that followed the eastern-states floods and Allianz was its most vocal backer.
"Certainly, as an organisation, we fully support the extension of that pool into high risk existing properties," managing director Richard Feledy told the committee. Allianz has argued that the existing cyclone pool is not fit to be stretched into a flood-pooling mechanism and favours a purpose-built scheme instead.
Its rivals do not agree. Insurance Australia Group (IAG) has kept its focus on mitigation: CEO Nick Hawkins called a flood pool "a big question for our country" in early 2024 but would not commit and the group later warned that extending the pool's 48-hour window would effectively turn it into a flood pool and push premiums higher -reservations aired in coverage of whether a government flood pool is a good idea. QBE has also prioritised resilience and land-use reform and backed further analysis of the 48-hour rule rather than a flood scheme. Neither has publicly endorsed extending the pool to flood.
For brokers and the wider community this is a live debate. The statutory review of the cyclone pool is the first examination of the Act underpinning the pool since it began. The review doesn’t explicitly deal with flood but how it measures the success or failure of the cyclone pool will directly impact Australia’s flood resilience debate. For brokers fielding flood renewals running into the tens of thousands of dollars, any reframing of flood cover that debate resolves will shape what can be placed and at what price, for many years to come.
