The Australian Consumers Insurance Lobby (ACIL) has welcomed Allianz's decision to join the cyclone reinsurance pool for householder insurance by January 2023, with the transition of residential strata and small business property expected to commence sometime next year.
However, ACIL identified severe market failures in the strata insurance industry in Northern Australia, including lack of strata insurers offering coverage for buildings with a sum insured over $5 million for new clients, except for some limited exclusive arrangements.
These market failures significantly impact consumer confidence in the Australian insurance industry. For example, strata insurance clients unable to find a local insurer to offer the coverage they need are going to overseas markets to arrange insurance, and paying premiums often 10 to 20 times the cost compared to other parts of Australia, with some insuring through policies that do not comply with the basic requirements under strata legislation.
The cyclone reinsurance pool, to be administered by the Australian Reinsurance Pool Corporation (ARPC) on July 1, aims to slash insurance premiums by up to $2.9 billion for more than 880,000 eligible household, strata, and small business insurance policies in Northern Australia.
ACIL wrote to Allianz to ask how it will comply with the review of strata insurance with expedience to support the needs of consumers in Northern Australia.
“Allianz's participation in the cyclone reinsurance pool is a win for consumers who were dealt a significant blow in July when it was revealed that no insurers would be on board for the 1 July rollout,” said ACIL Chairperson Tyrone Shandiman.
ACIL has been calling for the cyclone reinsurance pool to deliver what it promised. Most recently, it shared ways to generate premium savings and continues to wait for further updates from insurers on when they are joining the reinsurance pool.