In a recent interview with Channel 7, ACIL Chairperson Tyrone Shandiman discussed the critical issue of fairness in the modeling of the Cyclone Reinsurance Pool. ACIL, a leading voice in the insurance industry, is emphasis ing the importance of including postcodes with a history of cyclones in contributing to the pool.
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The Australian Consumers Insurance Lobby Inc (ACIL) is deeply concerned that residents in Northern Australia are subsidising free cyclone coverage for Southern parts of Australia, despite having a history of cyclones or the potential for future cyclones due to changing weather patterns.
Last month, ACIL released a comprehensive report titled "Under the Lens: ACIL's First Evaluation of the Cyclone and Cyclone-Related Flood Reinsurance Pool." The report highlighted a historical instance from January 1950 when cyclone TC119 initially made landfall on the Gulf of Carpentaria coast and eventually reached Sydney as a category 1 system approximately three days later. ACIL highlights that even though category 1 cyclone events are unlikely to cause significant wind damage, the potential for substantial water damage claims resulting from leaking roofs and buildings underscores the critical need to properly account for such occurrences.
The Cyclone Reinsurance Pool provides cyclone cover to eligible buildings Australia wide, but not all policyholders are required to pay premiums. For instance, on the east coast, only policyholders located north of Port Macquarie are obligated to pay premiums.
ACIL Chairperson, Tyrone Shandiman “Sydney gets free cyclone cover for free, even with its history of cyclone events, leaving North Queensland and Northern Australia to foot the bill. This isn't a matter of North vs South - it's about fairness. If a cyclone were to strike Sydney once more and the city accessed funds from the Cyclone Reinsurance Pool without making any contributions, it would undoubtedly spark outrage in Northern Australia. Our aim is to ensure that the North, already grappling with exorbitant insurance premiums, is not subsidising free coverage for southern regions of Australia that could have a claim.”
ACIL expressed its concerns to Assistant Treasurer Stephen Jones, who represents the Sydney electorate of Whitlam. Regrettably, the initial meeting did not result in a receptive response from the Assistant Treasurer, underscoring the necessity for heightened advocacy and increased awareness regarding this issue. ACIL has also turned to the Joint Select Committee for Northern Australia, pressing an urgent need for a revision of the modelling under the pool.
ACIL remains committed to advocating for a fair and balanced approach to the Cyclone Reinsurance Pool. We call upon the Federal Government and Australian Reinsurance Pool Corporation to review the modelling to ensure a fairer approach to the Pool.
The Australian Consumers Insurance Lobby Inc (ACIL) is pleased to announce the release of its first comprehensive evaluation report on the Cyclone and Cyclone-Related Flood Reinsurance Pool (the Pool), titled " Under the Lens: ACIL's First Evaluation of the Cyclone and Cyclone-Related Flood Reinsurance Pool".
ACIL's evaluation was less than commendable of the Pool, emphasising a "needs improvement" verdict. The observation that the Pool offers limited to no substantial savings for consumers underscores the urgency for proactive measures to enhance its effectiveness. ACIL calls on policymakers to stay the course and initiate necessary changes before the 2025 review to avoid missing opportunities for timely improvements.
Key concerns raised by ACIL in the report spotlight the inequity where Northern Communities shoulder the financial burden of cover for their southern counterparts. The necessity of a comprehensive review of the current modelling is underscored, highlighting the importance of accuracy and fairness in distributing the pool's benefits. ACIL also provided a less than flattering assessment of insurers' interactions with the Pool.
ACIL's report not only highlights challenges but also offers solutions. Recommendations on reducing premiums linked to cyclone cover are put forth. ACIL advocates for an expanded eligibility framework for the pool, a move that encompasses sectors such as marine insurance, which grapples with soaring premiums, high cyclone excesses, and gaps in coverage for cyclone events.
ACIL was in Canberra on 11th & 12th September to meet with Assistant Treasurer Stephen Jones and Joint Select Committee Members for Northern Australia, including, Hon Warren Entsch MP, Mr Luke Gosling OAM MP, Senator Dean Smith, and Mr Andrew Willcox MP.
"We are excited to share the results of our in-depth evaluation of the Cyclone Reinsurance Pool. This report underscores our dedication to ensuring an insurance landscape that truly serves the interests of consumers." states Tyrone Shandiman, Chairperson at ACIL. The discussions we had with the Assistant Treasurer and members of the Joint Select Committee for Northern Australia were receptive, and we expect they will yield tangible benefits for consumers."
This release marks a pivotal moment for the insurance sector in Northern Australia. It lays the foundation for inclusive, affordable, and efficient insurance protection, reinforcing a brighter future for communities across the region.
CLICK ON THE ICON BELOW TO ACCESS THE REPORT: