The Cyclone Reinsurance Pool (CRP) has contributed to reducing pressure on insurance premiums in Northern Australia, but a greater focus on climate resilience and mitigation is required to put sustainable downward pressure on insurance costs, the Insurance Council has told the Government's review of the scheme.
In its submission to the statutory Review of the Terrorism and Cyclone Insurance Act 2003, the Insurance Council says the CRP must be part of a broader solution that includes policies to actively reduce risk.
The Review is a first for the CRP and aims to assess its effectiveness in improving insurance affordability and availability for areas facing high cyclone risk.
Since its inception in 2022, the CRP has contributed to lowering premiums, with the Australian Reinsurance Pool Corporation (ARPC) estimating reductions of up to 39 per cent for the highest-risk properties.
Insurance access has also improved, with home insurers accepting more quotes across all risk bands -the highest-risk areas saw a 27 per cent increase in accepted quotes, according to the ARPC.
Risk reduction remains a core focus for the insurance industry.
The Insurance Council supports greater alignment between the CRP and mitigation efforts, including building a shared evidence base over time that enhances accurate risk-based pricing and supports mitigation efforts.
However, the CRP does not directly reduce the underlying risk posed by extreme weather. As cyclonic events continue to intensify, greater investment in resilience and mitigation is critical to safeguard communities and deliver long-term insurance affordability.
The insurance industry remains particularly concerned about the affordability of flood cover, with 1.36 million properties across Australia facing flood risk. This challenge requires a coordinated, whole-of-system approach that combines financial incentive, infrastructure investment and community engagement.
The Insurance Council is committed to working with the Government to ensure the CRP is as effective as possible and continues to advocate for an uplift in Australia's mitigation and resilience investment.
The Insurance Council's submission is available on our .
Quotes attributable to ICA Deputy CEO Kylie Macfarlane:
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.
But more work must be done to better align the CRP with risk mitigation by leveraging data on what works and investing in risk mitigation.
Extreme weather continues to intensify, requiring genuine partnership between government and industry to reduce risks and protect communities.
Insurers are working with all levels of government on solutions that deliver long-term improvements to community safety and insurance affordability.
