Cyclone Reinsurance Pool: Early Gains, But the Gap Remains Too Wide

The Australian Consumers Insurance Lobby (ACIL) has welcomed the latest findings from the ACCC’s Insurance Monitoring – Fourth Report, which show the Cyclone Reinsurance Pool is starting to reduce the gap in insurance premiums between Northern and Southern Australia. However, ACIL warns that the job is far from done and calls for continued reform to address unaffordable premiums in cyclone-prone regions.

The report highlights early success:

• Home insurance policyholders in the highest risk bands (rating band U & W) are seeing premium reductions above 20%.

• Small and medium-sized businesses (SMEs) in high-risk zones (rating band V & W) are benefiting from reductions of up to 40%.

• On average, homes in medium to high cyclone risk areas received an 11% premium reduction, while homes with nil cyclone risk experienced a 7% increase.

These figures confirm the pool is beginning to rebalance pricing. However, the average premium per $100,000 sum insured in medium to high risk areas still remains more than double that of nil-risk areas — dropping from $701 to $627, compared to an increase from $279 to $299 in nil-risk areas.

“There is now clear evidence the cyclone reinsurance pool is working,” said Tyrone Shandiman, Chairperson of ACIL. “The gap is beginning to narrow — but more must be done to deliver fair and affordable premiums for Australians in disaster-prone regions. We cannot accept the current gap — over 100% — as the new normal.” “What’s missing from the reporting is insight into the most impacted, highest-priced consumers — those who remain unable to afford insurance. We must continue refining the pool to ensure the benefits reach those who need them most.”

A formal review of the Cyclone Reinsurance Pool is scheduled for July 2025, and ACIL will soon make contact with Assistant Treasurer Daniel Mulino seeking clarification on when the review will commence and how it will be conducted.

ACIL is urging that the review focus on four critical areas:

1. Mitigation and Resilience Measures:  Private mitigation efforts paid for by policyholders are not delivering insurance savings. ACIL believes the government should step in with funded or subsidised mitigation programs, and has called on the Queensland Government to invest $100 million of stamp duty revenue into  private cyclone risk reduction in North Queensland.

2. Review of Rates and Regional Equity: Major claims events such as Cyclone Alfred in South East Queensland raise concerns that higher-paying Northern residents may be subsidising other regions. The review must assess if the rates are equitable, particularly in light of the Interdecadal Pacific Oscillation (IPO) — a climate cycle which may shift cyclone risk further south.

3. Expansion of Eligibility: The pool should be expanded to cover currently excluded property types including commercial buildings over $5 million, fixed marine infrastructure, farms, and aged care facilities.

4. Expansion of Perils Covered: Given the progress made on cyclone risk, the government should consider expanding the model nationally to cover other high-cost, risk-priced perils such as flood, bushfire, storm surge, and earthquake.

   
   

“We applaud the progress — but we cannot rest,” Mr Shandiman said. “We need bold action to close the affordability gap, support our most vulnerable communities, and ensure that every Australian has access to fair and affordable insurance.”

ACIL Urges Queensland Treasurer to End the 'Tax on a Tax' and Double Investment in Resilience

The Australian Consumers Insurance Lobby (ACIL) has called on Queensland Treasurer David Janetzki to double the state’s investment in disaster resilience by redirecting stamp duty collected on the GST component of insurance premiums—revenue widely criticised as an unfair “tax on a tax.”

In a letter sent, ACIL noted that Queensland is projected to collect over $10 billion in insurance stamp duty over the next five years. Of that, approximately $912 million will come from taxing the GSTon each and every general insurance policy in Queensland —an approach that disproportionately burdens households and small businesses already facing unaffordable premiums, particularly in North Queensland.

“Queensland is the most unaffordable state in Australia for insurance, and the Government is taxing people not just on their premiums, but also on the GST applied to those premiums,” said ACIL Chairperson Tyrone Shandiman. “Redirecting that revenue to fund risk reduction would send a powerful signal that the Government is serious about cost-of-living relief and disaster resilience.”

ACIL welcomed the existing $450 million Queensland Resilience and Risk Reduction Program but pointed out that it represents less than 5% of forecast insurance stamp duty revenue. In contrast, using just the tax-on-GST portion could more than double the current investment.

Targeted Funding for North Queensland

As part of the proposal, ACIL has again urged the Government to commit $100 million per annum specifically for cyclone resilience measures in North Queensland, where the insurance burden is most extreme. The funding could support roof strengthening, roof maintenance, debris management, and securing outdoor structures in high-risk areas.

The organisation also recommended that any such state investment be contingent on securing an agreement with the Australian Reinsurance Pool Corporation (ARPC) and Federal Treasury to reduce Cyclone Reinsurance Pool premiums in regions where risk is materially reduced.

“It’s not just about spending more—it’s about ensuring that mitigation translates into real premium relief,” Mr Shandiman said.

ACIL has requested a meeting with Treasurer Janetzki to discuss how Queensland can better align its resilience funding with the communities that are paying the most—and getting the least relief.

“This is a chance to reform how we use stamp duty and invest where it matters most. The current system penalises those who can least afford it. That must change,” Mr Shandiman said.

Enough is Enough: ACIL Threatens Push for Publicly Appointed Assessors if Insurers Fail to Fix Expert Oversight

The Australian Consumers Insurance Lobby Inc. (ACIL) has today responded to the latest ASIC directive (click here) urging home insurers to fix their oversight of independent experts and improve transparency on cash settlements, warning that if the industry fails to act, ACIL will begin advocating for government-sanctioned assessors and experts who represent the insured at claim time.

This is not the first warning. In July 2023, the General Insurance Code Governance Committee released a damning report that exposed serious concerns about the quality and reliability of expert reports relied on in claims decisions. While the industry responded by releasing a so-called “best practice” Expert Report Standard in 2024, the standard has failed to drive meaningful change. In practice, abuses persist and consumer outcomes remain compromised.

“We work closely with claims advocates at the coal face who are still seeing an alarming volume of biased and poor-quality expert reports,” said Tyrone Shandiman, Chairperson of ACIL. “The problem is systemic and deeply rooted in the way insurers engage, oversee, and influence the experts they appoint.”

While the industry’s 2024 Expert Report Standard was presented as progress, it has failed to deliver genuine reform. The document is riddled with out clauses and lacks teeth.

“One of the greatest travesties is that the Standard does not impose obligations on experts directly. Instead, it relies on insurers to ensure experts act properly. That’s like asking the fox to guard the henhouse,” Shandiman said.

Concerns around poor expert oversight are compounded by the ongoing mishandling of cash settlements. Despite clear recommendations from inquiries—such as PFI-13 from the flood inquiry, which called for fair uplift allowances to account for consumers managing their own repairs—insurers have failed to implement meaningful protections. Cash settlements are frequently offered without transparency, fall short of covering the true cost of repairs, and shift complex project management burdens onto policyholders. These practices leave consumers financially exposed, while insurers escape responsibility for ensuring fair outcomes.

ACIL has made issues associated with expert reports one of its core advocacy priorities.  It has raised concerns about these issues and to date has only had dismissive responses from the Insurance Council of Australia (ICA), which failed to address the substance of the concerns or explain why these matters should not be dealt with in the General Insurance Code of Practice or the Expert Report Guide:

• Direct interference by insurers in how experts assess claims, compromising independence;

• Incentivised denials of claims through hidden performance metrics favouring reduced payouts;

• Failure by experts to cite or apply relevant building codes, leaving consumers at risk of substandard outcomes;

• Disregard for previously certified solutions, resulting in inconsistent and unfair determinations on defects;

• Financial barriers to dispute—where even paying for a second opinion doesn’t shift the insurer’s stance, as they simply engage another expert to maintain a “two-to-one” advantage;

• Conflicted ownership models, where related entities control multiple parts of the claims process including loss adjusters, engineering consultants, builders, restorers, and surveyors  without disclosing this to the consumer;

• Unsolicited maintenance recommendations, coercing consumers into unnecessary and costly works.

Despite years of feedback, media scrutiny, and regulator interest, meaningful reform has stalled. ACIL is in the process of writing to the Insurance Council of Australia to formally signal that unless there is real progress, it will advocate for independent, publicly appointed assessors who advocate for consumers in the claims process.

“Consumers deserve confidence in the experts who decide the fate of their claims. If the industry cannot deliver that, then the model must change—because right now, it’s failing the people it claims to serve.”