Reinsurance pool could lead to premium discount in Australia's cyclone areas

The government announced a $7.4b (A$10b) cyclone reinsurance pool that will help drive down insurance premiums.

The Australian reinsurance pool could lead to a 20% premium discount for homes located in medium to high-risk cyclone areas if implemented correctly, according to media reports, citing the Royal Automobile Club of Queensland (RACQ).

In May, the federal government announced a $7.4b (A$10b) cyclone reinsurance pool that will help drive down insurance premiums in hard-hit regions. 

Half a million residential, strata, and small business property insurance policies in Northern Australia are expected to be eligible, which could slash premiums by more than $1.1b (A$1.5b) over 10 years.

RACQ has lodged a submission to the Federal Treasury regarding the pool, remarking that it must be well-designed and part of a broader package to offset price pressures, reports said.

Other submission points include mandatory national participation from insurers, the inclusion of cyclone-related flooding and storm surges, a suitable transition period, pricing at the individual property level, coverage for landlords, and continuous operation.