The Government has created a cyclone and flood related damage reinsurance pool. From 1 July 2022, insurance companies will use the pool, a financing mechanism, to increase their ability to support specific types of risks.
The objective of the reinsurance pool is to make insurance more accessible and affordable for:
- residential strata
- small business properties.
The ACCC will collect data and monitor insurance premiums to see that savings are passed through to policy holders. This will help to ensure that the reinsurance pool is delivering its intended outcomes.
ACCC role in monitoring insurance cover
We will provide the government with information about the insurance premiums households, residential strata and small business properties pay for cyclone and cyclone-related flooding.
Specifically, we will monitor prices, costs and profits of the supply of insurance cover that relates to:
- the destruction of, or damage to, residential homes and contents
- strata title residences and some small business premises and contents.
We will compare these factors before and after the introduction of the reinsurance pool.
We will provide at least one report each calendar year, starting in 2022.
Our role is to monitor prices, costs and profits relating to the supply of insurance cover before and after the introduction of a cyclone and related flood damage reinsurance pool.
Part VIIA of the Competition and Consumer Act 2010 (the Act) sets out the ACCC’s functions in relation to price inquiries, price notifications and price monitoring.
Background to the reinsurance pool
In 2017, the Australian Government directed the ACCC to conduct a wide-ranging inquiry into the supply of residential building (home), contents and strata insurance in northern Australia. Our Northern Australian Insurance Inquiry final report was published in 2020 and details our market analysis for home, contents and strata insurance in northern Australia.