The Australian Reinsurance Pool Corporation (ARPC) has welcomed the government's plan to establish a reinsurance pool for cyclone and cyclone-related flooding events.
Early this month, Prime Minister Scott Morrison announced that the Federal Government plans to establish a $10 billion reinsurance pool to cover the cyclone and associated flood risk in home, strata, and small business insurance policies. It will also invest $40 million to help the North Queensland Strata Title Resilience Pilot Program to subsidise the cost of cyclone risk mitigation works for strata properties in North Queensland.
The insurance industry has welcomed Minister Morrison's announcement, with the ARPC announcing that it is ready to support the Australian Department of the Treasury as it undertakes the detailed design of the new reinsurance pool.
“With deep experience running a government-backed reinsurance pool, ARPC is well-positioned to engage with stakeholders in the development of the new pool. We look forward to sharing more details with you as these emerge,” said ARPC chief executive officer Dr Christopher Wallace.
A Treasury-led taskforce will develop the final design of the reinsurance pool in close consultation with the industry, with the design finalised after the consultation process.
The Insurance Council of Australia (ICA) also welcomed the announcement of the reinsurance pool, noting the government's commitment to improving the affordability and availability of insurance for homeowners and small businesses at risk of cyclones.
“The industry has done considerable work on the key fundamentals of a public reinsurance scheme, and if properly designed and implemented, a reinsurance pool can put downward pressure on premium costs,” said ICA executive director and CEO, Andrew Hall.
IAG managing director and CEO Nick Hawkins warned that Australia would likely experience more frequent and extreme weather events in the coming years, particularly in northern Australia.
“It's critical that people, businesses, and communities can access affordable insurance so they can get back on their feet as quickly as possible,” Hawkins said.
