21 May 2021

Consultation on reinsurance pool for cyclone and related flood damage

Today, the Government is releasing a consultation paper seeking feedback on the design of a reinsurance pool for cyclone and related flood damage.

On 4 May 2021, the Government announced its intention to establish a reinsurance pool to cover cyclone and related flood damage. The pool would be backed by a $10 billion Government guarantee.

The pool would seek to improve the accessibility and affordability of insurance for households and small businesses in cyclone-prone areas, mainly located in Northern Australia. It is expected that the reinsurance pool would reduce premiums by up to $1.5 billion over 10 years for households and small businesses located throughout Northern Australia.

The establishment of a reinsurance pool will ensure that home and business owners in high-risk areas can get affordable insurance, giving more Australians the security and confidence that insurance provides.

The Government has set up a Treasury-led Taskforce to lead consultation with industry and community representatives to inform the reinsurance pool’s final design.

The reinsurance pool would commence from 1 July 2022 and be operated by the Australian Reinsurance Pool Corporation (ARPC), which operates Australia’s existing terrorism reinsurance scheme.

The consultation paper is available on the Treasury website, with consultation closing on Friday, 18 June 2021.