The Cyclone Reinsurance Pool is still delivering for homeowners in northern Australia. Its reach into strata and small business, the classes brokers place, is shrinking.
The Australian Reinsurance Pool Corporation's (ARPC) 2026 Financial Outlook Report, released on October 21, found the number of strata properties reinsured by the pool fell 4% between 31 March 2025 and 31 March 2026. SME properties fell by 5% to 10%. ARPC said the reasons were uncertain.
The first possibility it listed was customers buying from insurers outside the pool, which it said may be more common for strata and SME because these classes are more likely to be underwritten by Lloyd's syndicates, which are not required to join. ARPC also pointed to strata committees insuring lots individually under home policies, policy consolidation, incomplete reporting, and affordability pressures changing how businesses and bodies corporate buy cover.
The household picture is steadier. ARPC's Premium Assessment, released on October 20, found quoted average home premiums for medium to high cyclone risk policies remain 14% to 37% lower than before insurers joined the pool. Quote success rates in those areas are up 25% to 28%. In the highest-risk wind bands, average home premiums have fallen 37% since October 2022. Premiums in the lowest-risk bands have risen 42% over the same period, which ARPC said likely reflects broader home insurance market movements rather than the pool.
Small business outcomes are more uneven. Average SME contents premiums remain lower in the highest-risk areas than before the pool, including a 34% reduction in the highest-risk wind band. SME business interruption results were more mixed, with average premiums higher than pre-pool levels. Business interruption makes up less than 1% of in-force pool premium.
"Insurance affordability remains a significant challenge, particularly for households and businesses exposed to natural hazards," ARPC chief executive Dr Christopher Wallace said.
The pool's finances have recovered from Tropical Cyclone Alfred. It recorded a $701 million positive operating result in 2025–26, after a $1.2 billion negative result in 2024–25. Claims for the 2025–26 season were $203 million, against a modelled long-term average annual loss of $638 million. Net liabilities fell to $33 million at 30 June 2026, from $734 million a year earlier.
"The significant movement between the past 2 financial years demonstrates the inherent volatility of cyclone risk and why the financial position of the pool needs to be considered over the longer term," Wallace said.
Pricing is tightening, however. The pool's premium adequacy ratio fell from 100.1% to 95.1%, at the bottom of ARPC's 95% to 105% target range, after modelled costs rose about 3% and changes in portfolio mix cut adequacy by about 2%. ARPC's draft Version 5 rates, proposed to apply from July 1, 2027, would lift total annual pool premium by 2.9%, from $748 million to $770 million.
For brokers with strata and SME clients in cyclone-exposed areas, two details in the report are worth acting on. The first is whether the insurer on a placement participates in the pool, since ARPC identifies Lloyd's syndicates as a likely route out of it. The second is mitigation. Wind premium discounts now apply to strata policies (since 1 April 2025) and SME policies (since 1 April 2026), including up to 10% for a roof retrofitted to current standards. ARPC said reporting of strata discounts has been minimal so far. Consultation on the draft rates closes on November 6.
