Reinsurance Pool Modelling

Australian Consumers Insurance Lobby Inc (ACIL) are concerned about reports from Assistant Treasurer Stephen Jones MP suggesting promises of premium savings associated with the Cyclone Reinsurance Pool made by the previous Government will not be met.

The new Federal Labor Government will shortly release modelling used to design the previous government’s Cyclone Reinsurance Pool and they believe savings promised are unachievable.

ACIL response to Modelling

• ACIL are disappointed to hear this news and we believe:

• savings advised by the previous government of up to 46% (including savings for strata properties up to a 58% and SMEs up to a 34%) are still needed to deal with the issue of affordability and availability of insurance in Northern Australia.

• If immediate fixes cannot be applied, the implementation of the Cyclone Reinsurance Pool should continue if it generates a positive outcome for consumers.

• a cyclone reinsurance pool is an appropriate mechanism to address affordability of insurance in Northern Australia.

• the modelling of the Cyclone Reinsurance Pool must continue to be refined to ensure that the Cyclone Reinsurance Pool meets its purpose.

• The legislated 3-year review of the reinsurance pool is not sufficient. A review of the reinsurance pool after 12 months must take place. This was agreed by the former Assistant Treasurer under their ministerial discretion and we will be seeking similar assurances from the new Assistant Treasurer Stephen Jones MP.

• the new government must work with the ARPC and all stakeholders to address the affordability crisis for insurance.

“We did have some reservations about whether the modelling associated the reinsurance pool stacked up when we were advised by Treasury the final reinsurance program would not be released to insurers until after the federal election in late May. The timing seemed somewhat unusual given feedback provided by insurers suggested this did not provide insurers enough time to implement the Cyclone Reinsurance Pool to consumers at the “household level’ on the 1 July rollout. Irrespective of the actions of the past government, the new government has a role to play in getting the Cyclone Reinsurance Pool right for policy holders. ACIL are passionate about a review of the Cyclone Reinsurance Pool after 12 months. We wrote to Anthony Albanese in April seeking commitment of a 12 month review, although this was not responded to we are following this up with the new government. It is clear the Cyclone Reinsurance Program will need updates to ensure it is fit for purpose for consumers”

Name Change & Broadening Scope of Consumer Advocacy

Members of Northern Australia Insurance Lobby Inc (NAIL) voted to change the name of their association at their recent AGM held on 16th June 2022 to the Australian Consumers Insurance Lobby Inc (ACIL).

NAIL was originally established as a consumer representative group for the issue of affordability and availability of insurance in Northern Australia and the change in name recognises the broadening of the scope of consumer issues ACIL will now address. While Northern Australia remains a key focus of our association, we have discovered broader issues associated with insurance (including affordability & availability of insurance) ACIL will now address.

ACIL’s key priorities in the coming year will be to:

1. Work with various stakeholders to ensure the implementation of the Cyclone Reinsurance Pool is fit for purpose for consumers. This includes dealing with any consumers issues following the release of the reinsurance pool and representing consumers on the expansion of the re-insurance pool to include marine risks from 1 July 2022;

2. Broaden the scope of the Australian Reinsurance Pool Corporation to deal with other insurance market failures such as flood, bushfire, storm surge, leisure industry liability etc.

3. Lobbying for the removal of government stamp duties and levies from insurance;

“Consumers are underrepresented on issues related to insurance and it is important they have a voice. Our lobbying during government consultations on the Cyclone Reinsurance Pool got material changes that will benefit consumers. Our organisation is still committed to consumers in Northern Australia but we believe more work needs to be done to address other failures in the insurance industry and we intend on lobbying to ensure consumers come first.” ACIL Chairperson Tyrone Shandiman said.

The elected committee for the coming year are:

• Tyrone Shandiman (Chairperson)

• Eva Rankmore (Secretary)

• Bradley Von Xanten (Treasurer)

• Pam Farrell (General Committee Member)

• Dawn Romanella (General Committee Member)

ACIL are looking for additional members to join our committee. We are looking prospective committee members that can represent or be the committee representative for other insurance issues such as flood, bushfire, storm surge, leisure industry liability.

Federal Government 1 July Start Date for Cyclone Reinsurance Pool – Our Concerns

The Northern Australia Insurance Lobby Inc (NAIL) have some concerns whether consumers will see the benefit of the Federal Governments Cyclone Flood Reinsurance Pool from 1st July.

NAIL has recently contacted Treasury, Insurance Council of Australia and five insurers (Suncorp, IAG, QBE, Allianz, & RACQ) and advice thus far suggests:

• The Australian Reinsurance Pool Corporation (ARPC) is finalising implementation arrangements, and has been consulting bi-laterally with insurers.

• The ARPC issued a draft of the reinsurance rates in late May and feedback has been provided to the ARPC who are currently considering it.

• Insurers have their work cut out for them to analyse pricing impacts of the reinsurance pool, change reinsurance arrangements and apply premium changes at a “household” level by 1st July.

• Many insurers have expressed it is unlikely they will be in a position to implement the reinsurance pool to consumers on 1 July, some hinting it would be impossible.

Large insurers have until December 2023 to have all eligible policies transferred into the reinsurance pool. NAIL expects some insurers to take full advantage of the extended timeframes.

“Consumers have been eagerly awaiting the release of the reinsurance pool which is designed to provide much needed premium relief to policy holders who are dealing with issues of affordability and availability of insurance. We know there has been a lot of work done by various stakeholders to get the reinsurance pool to consumers by 1st July. Given the affordability issues being currently experienced, we know this news may come as a disappointment to consumers, particularly as we have been informed some policy holders have altered the expiry of their insurance policies in anticipation of reinsurance pool release. Given the lack of affordability of insurance in Northern Australia, we can only hope consumers will receive benefit of the reinsurance pool as soon as possible.” NAIL Chairperson Tyrone Shandiman said.

NAIL is working constructively with all stakeholders to ensure the Cyclone Reinsurance Pool is fit for purpose and meets the needs of consumers. We will be closely monitoring the impact the reinsurance pool has on consumers.

In other news, former NAIL chairperson Margaret Shaw has departed NAIL due to personal commitments. The committee acknowledges her commitment to consumers in Northern Australia and thank her work that she has done.

NAIL is pleased to announce we have recently appointed Dawn Romanella to the fill the vacant committee position. Dawn is originally from Canada, has a Bachelor of Education and a Licence in Real Estate. Dawn is the Asset and Property Manager at Coral Sea Marina Resort, the largest destination marina in Australia. Dawn has lived in Australia for 22 years and currently resides in the Whitsundays. She is a proud mother to four children and enjoys travelling and keeping fit. Dawn is a great new addition to our team, particularly given Marine insurance will be a focus in the coming year.