The Australian Consumers Insurance Lobby Inc. (ACIL) has made a significant submission to the Australian Reinsurance Pool Corporation (ARPC) for the 2024 Cyclone Reinsurance Pool (the Pool) premium rates review. This submission underscores the urgent need to address the disparity in insurance premiums between Northern and Southern Australia, advocating for a fairer and more equitable system.
Key Points of the Submission:
1. Equitable Contributions: ACIL highlights the necessity for all regions, including those south of Port Macquarie, to contribute to the Cyclone Reinsurance Pool. Historical data from the University of Newcastle reveals that regions in New South Wales have experienced cyclone events are not currently contributing to the Pool, demonstrating that the risk is not confined to the north.
2. Fair Modelling: The current modelling for the Pool does not adequately consider the potential for future cyclone events in southern regions, leading to an unjust premium burden on Northern Australia residents. ACIL contends that private reinsurers would factor in cyclone risks for areas south of Port Macquarie, and the Pool should do the same
3. Transparency in Rate Setting: To foster greater transparency, ACIL advocates for the disclosure of reinsurance costs on policy premium notices. This would enable consumers to understand the impact of the Pool on their premiums and hold insurers accountable for passing on savings.
4. Proactive Mitigation Measures: ACIL supports pre-cyclone season roof inspections for strata buildings, which can significantly reduce claims and improve the Pool’s effectiveness. Discounts should be provided for buildings that comply with established inspection criteria.
"Tyrone Shandiman, Chairperson of ACIL, stated, 'It is imperative that the Cyclone Reinsurance Pool operates on principles of fairness and equity. Residents in Northern Australia should not bear a disproportionate burden while southern regions contribute nothing. Our submission calls for a more balanced approach that ensures all Australians share the risk and benefits of cyclone insurance.'"
ACIL’s submission to ARPC aims to bridge the divide between Northern and Southern Australia, promoting fairer premiums and a more just reinsurance system. By addressing these key issues, we can ensure that all Australians are protected and treated equitably in the face of increasing climate challenges.