Insurance affordability remains a significant issue in northern Australia and other high cyclone risk areas, according to the ACCC’s first insurance monitoring report.

The report finds that policyholders in those regions face much higher premiums on average, and that those premiums have increased much more quickly than for the rest of the country over the past decade.

The ACCC has been tasked with monitoring the effects of the government’s new cyclone and cyclone-related flood damage reinsurance pool, which is operated by the Australian Reinsurance Pool Corporation. This first report examines the current state of the market and sets a baseline of prices and costs before insurers join the pool.

The pool commenced operations in July 2022 and is intended to improve the affordability and accessibility of insurance for householders, strata properties and small businesses in cyclone-prone areas, by reducing the cost of reinsurance.

Participation in the scheme will be mandatory for insurers, although there is a transition period, with large insurers required to join by the end of 2023 and smaller insurers by the end of 2024. To date, no insurers have started using the pool.

The report notes that one insurer is set to partly join the pool in early 2023. However, many appear likely to enter the pool closer to their legislative deadlines. 

“This first report forms a reference point to assess the actual impact of the pool on premiums and the savings it may generate for policyholders in northern Australia, as insurers start joining the pool,” ACCC Commissioner Peter Crone said.

The report finds that in 2021-22:

  • the average premium for residential combined building and contents insurance in northern Australia was about $2,370, more than $1,000 above the average across the rest of Australia
  • the average premium for strata insurance in northern Australia was about $5,740, almost double that of the rest of Australia (about $2,940)
  • the average premium for small business building and contents insurance in northern Australia was about $3,160, almost double that of the rest of Australia (about $1,610).

The report also notes that many insurers have identified challenges in joining the pool, such as the legislative definition of the pool’s claims coverage period and difficulties with adjusting their existing reinsurance arrangements.

“As insurers join the reinsurance pool, we will monitor market developments closely to assess the pool’s impact on reinsurance costs and other premium components, and the ultimate effect on the prices faced by policyholders,” Mr Crone said.

“In our future reports, we will also examine broader insurance market issues, such as the number of insurers present in cyclone-prone regions.”

The findings in this first monitoring report come after the ACCC’s final report from the Northern Australia Insurance Inquiry between 2017 to 2020, which contained 38 recommendations to address insurance affordability and availability issues in northern Australia.


On 12 January 2022, the Assistant Treasurer issued a direction to the ACCC, to monitor prices, costs and profits relating to the supply of insurance cover to residential, strata and small business premises and contents before and after the introduction of a cyclone and related-flood damage reinsurance pool. This is the first report under this direction.

On 31 March 2022, Parliament amended the Terrorism and Cyclone Insurance Act to establish a cyclone and related-flood damage reinsurance pool. The pool is administered and operated by the Australian Reinsurance Pool Corporation (ARPC).

Reinsurance is effectively insurance for insurers. Reinsurance is a risk management tool designed to protect insurers from large financial losses when paying out claims to policyholders. In return for transferring risk to reinsurers, insurers pay reinsurance premiums.

A government reinsurance pool, such as that run by the ARPC, is an entity which is owned, run, funded and/or backed by government, and offers reinsurance to insurers for specific risk types (such as, in this case, cyclones and related damage). Insurers pay a reinsurance premium to transfer risks associated with the particular perils onto the government.