Australia’s federal government is consulting on proposals for a cyclone reinsurance pool taskforce.
Earlier this month the government unveiled plans to launch the reinsurance pool for cyclones and related flood damage mainly in Northern Australia.
The Treasury has now published a consultation paper, seeking feedback from the insurance industry, community representatives and interested stakeholders on the reinsurance pool's final design. The pool, scheduled to start from July 2022, will be backed by a $10 billion government guarantee.
The scheme, which will be managed by the Australian Reinsurance Pool Corporation (ARPC), will cover residential, strata and small business property insurance policies in cyclone-prone areas.The ARPC urges stakeholders to register on the taskforce's webpage for updates and take part in the consultation process, which is open for submissions until June 18, 2021.
The move aims to reduce insurance premiums across Northern Australia by more than $1.5 billion for households, strata and small businesses over 10 years. More than 500,000 residential, strata and small business property insurance policies in Northern Australia are expected to be eligible for cover by the reinsurance pool.
Minister for resources, water and Northern Australia Keith Pitt said high insurance costs are “a problem for business, a problem for local economies and a problem for every person who lives in the North”.
In May, the government also announced a plan to specifically reduce insurance costs for strata properties, by committing $40 million for the North Queensland Strata Title Resilience Pilot Program, to start in 2022.
Strata properties - a model of property ownership in Australia that allows individuals to buy ownership in a larger property or building - face some of the worst insurance affordability pressures in Northern Australia.
The Australian Competition and Consumer Commission said that in 2018-19 the average strata premium was $6,800 in North Queensland, compared with the Australian average of $3,300.
It added that residents have few options other than to pay this premium because strata properties are required to hold insurance under Queensland legislation.