Draft cyclone pool rates released this week would cut premiums for high-risk properties and lift them for lower-risk ones – but whether either change reaches policyholders depends entirely on decisions insurers are not required to make.
The Australian Reinsurance Pool Corporation (ARPC) opened public consultation on October 1, 2026, on proposed draft Version 5 premium rates for the Cyclone Reinsurance Pool, with changes proposed to take effect from July 1, 2027.
The pool is national. Brokers on both sides of the risk spectrum – those with high-risk clients in line for reductions, and those with lower-risk clients facing modest increases – should be tracking this consultation.
Under the draft rates, average cyclone pool premiums for high-risk properties would fall from $981 to $897. Medium-risk properties would move from $589 to $561.
For high-risk properties, proposed pool premiums would sit approximately 70% below estimated private market cyclone premiums, according to ARPC’s public consultation document.
The cross-subsidy runs the other way for lower-risk clients. Minimal-risk properties face an average increase from $62 to $68. Low-risk properties would move from $237 to $249. These increases are concentrated among properties in lower-risk regions.
The total annual cyclone pool premium collected from insurers would rise by $22 million – 2.9% – from $748 million to $770 million. Long-term premium adequacy would lift from 95.1% to 97.9%.
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ARPC is explicit on this point: insurers are not required to pass pool premium changes through to individual policyholders. A reduction in the pool component does not guarantee a fall in total premium.
The pool’s track record shows pass-through has been occurring. ARPC’s analysis of online quotes shows average premiums in the highest Wind bands fell 37% between October 2022 and July 2026 – during a period when broader home insurance costs rose sharply nationally. If the draft Version 5 rates are passed through, ARPC estimates average total home buildings premiums in the highest Wind bands would fall a further 3.9% from July 2026 levels.
The Australian Competition and Consumer Commission’s (ACCC) fifth and final insurance monitoring report, published June 25, 2026, confirmed insurers had been passing through reductions in reinsurance costs to policyholders. The same report flagged an unresolved issue: some insurers have yet to implement mitigation frameworks that would allow policyholders to receive premium discounts for reducing their cyclone risk.
For brokers with clients who have made physical improvements to their properties, this is worth checking directly with each insurer.
The 2026 Pricing Review is ARPC’s most comprehensive reassessment since the pool launched. It estimates annual cyclone claims and expenses at $786 million – approximately 3% above the previous assessment.
The increase is driven primarily by updated riverine flood modelling. Flood costs rose 28%, from $100 million to $127 million. Wind costs edged down 1% to $636 million. Storm surge fell 6% to $23 million.
ARPC confirmed the higher flood estimate reflects improved data and property location information, not an increase in physical flood risk.
On climate, ARPC reviewed the latest science and concluded no additional explicit climate adjustment was required for this review cycle. For context, the Australian Prudential Regulation Authority’s (APRA) March 2026 Insurance Climate Vulnerability Assessment (CVA) found around one in seven homes is currently uninsured, a figure that could rise to one in four by 2050 under climate stress scenarios.
The Insurance Council of Australia (ICA) has consistently argued the pool alone will not deliver sustainable affordability. In its submission to the government’s statutory review of the Terrorism and Cyclone Insurance Act 2003 in November 2025, the ICA called for greater alignment between the pool and mitigation investment, and noted that inflation, global reinsurance market dynamics, and operational costs are offsetting some of the premium reductions the pool delivers.
ICA deputy CEO Kylie Macfarlane said: “Insurers are passing on savings from the CRP to policyholders, who are seeing improvements in insurance affordability and availability, particularly in areas facing the highest cyclone risk.”
No specific ICA response to the Version 5 consultation had been published at the time of writing, given the consultation only opened on October 1, 2026.
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All mandated insurers joined the pool by December 31, 2024. The pool now covers more than 3.1 million buildings nationally.
The consultation closes at close of business on Friday, November 6, 2026. ARPC intends to finalise rates in December 2026 and publish them by December 31, 2026, ahead of the proposed July 1, 2027, start date. The rates remain draft and are not final.
Three things worth acting on now.
Ask each participating insurer directly how they plan to handle the pool premium change at renewal. The reduction is at the reinsurance level – what reaches the client depends on the insurer.
Flag the modest increases coming for minimal- and low-risk clients. The dollar amounts are not large in isolation, but the direction has changed, and clients will notice.
For clients who have made physical risk-reduction improvements to their properties, check whether their insurer has implemented a mitigation discount framework. The ACCC confirmed in June 2026 that some have not, regardless of where the property is located.
Written submissions can be sent to [email protected] by close of business November 6, 2026. ARPC has confirmed responses will not be published.
