The Morrison Government has today released draft legislation on the reinsurance pool for cyclones and related flood damage.
This is the next step in delivering the Government’s commitment to establishing a reinsurance pool that will support and protect hardworking people in Northern Australia. We have listened to Australians who live in the north of the country and are taking action to help reduce their insurance costs.
The pool will improve the accessibility and affordability of insurance for households and small businesses in cyclone‑prone areas across Australia.
It is also expected to increase insurer participation in the northern Australian market, increasing competition and putting further downward pressure on premiums.
The reinsurance pool will be backed by a $10 billion Government guarantee and commence on 1 July 2022 for residential, strata, and small business property insurance policies. Coverage for small business marine property insurance policies will be further developed and included from 1 July 2023.
The reinsurance pool will be mandatory for insurers with eligible risks to participate in, with an 18 month transition period for large insurers and an additional 12 months for small insurers. Mandatory participation will ensure the reinsurance pool provides the greatest possible reduction in premiums.
To ensure the reinsurance pool is delivering for northern Australia, the Government will provide $18.4 million over five years to the Australian Competition and Consumer Commission (ACCC) to monitor the premiums of insurance policies covered by the pool from 2022. The ACCC will collect data to evaluate the impact of the reinsurance pool and assess whether the savings from the reinsurance pool are being passed through to policyholders.
The are available on the Treasury website, with submissions on the draft legislation sought by 17 December 2021.
