Australia delivers on cyclone reinsurance pool, drawing praise from local carriers

The  Insurance Council of Australia (ICA) lined up in support of an Australian government plan to establish a reinsurance pool for cyclone and cyclone-related flood damage, the lobby group said.

The reinsurance pool would seek to improve the accessibility and affordability of insurance for households and small businesses in cyclone-prone areas, chiefly in northern Australia, the government had said upon introducing legislation just passed.  Insurance premiums are often "significantly more expensive" in northern Australia.

"Insurers welcome the passage of the reinsurance pool legislation, which is an important next step on a very complex issue," ICA CEO Andrew Hall (pictured) said. "The Pool is scheduled to commence in just three months, so it’s vitally important that insurers and their customers are able to understand how and to what extent this will impact on premiums."

The mandatory scheme should allow insurers to reinsure the risk of losses from claims at lower cost and, under a close regulatory eye, pass the savings through to consumers.

A legislative impact study had put the likely annual regulatory cost at A$0.44 million.

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