The Australian Competition and Consumer Commission has found the federal government’s cyclone reinsurance pool reduced premiums for many households and small businesses in medium to high cyclone‑risk areas, but overall insurance costs remain high and continue to rise across much of the country.
The ACCC’s fourth insurance monitoring report — the first compiled after all eligible insurers joined the pool — concluded the scheme, which began in 2022, has started to deliver the targeted relief for those exposed to cyclone risk, although the benefits have taken time to flow through to customers.
“With most customers now experiencing ‘post-pool pricing’, we now have a more complete picture of the pool’s potential to achieve its intended outcomes,” ACCC Commissioner Peter Crone said.
The report analysed changes in average premiums before and after insurers altered pricing to reflect their participation in the pool. It found the average home and contents premium, measured per $100,000 of sum insured, fell by 11 per cent in medium to high cyclone‑risk areas. By contrast, average premiums for low‑risk properties increased by four per cent and for properties at no risk rose by seven per cent.
“Our analysis shows the pool is lowering premiums of policyholders who live in areas with higher cyclone risk, as it was designed to do. However for many consumers in northern Australia, high cyclone risk may not be the key reason, or the only reason, that their insurance premium is unaffordable.” Mr Crone said.
The ACCC reported sharper reductions in some coastal pockets of northern Australia. Median home and contents premiums were about 15 per cent lower in parts of north Western Australia and north Queensland — notably Mackay, Cairns and Townsville — with a nine per cent median fall in Karratha. Small business policies saw an average decrease of 24 per cent in medium to high risk areas.
Strata insurance was less affected overall but still saw a meaningful decline: a seven per cent fall in average premiums in medium to high risk regions. Those paying the highest strata premiums in Townsville, Karratha, Mackay and Cairns experienced the biggest savings, with reductions of 28, 23, 19 and 17 per cent respectively.
Despite these gains, the ACCC said many Australians continue to face very high and rising costs. The average home and contents premium in north Queensland and the Northern Territory now exceeds $3,000 a year, while in north Western Australia it tops $4,600. Strata premiums are especially steep in the north west, where the average rose by 18 per cent to more than $18,000 per policy.
Premiums outside the far north also climbed sharply in 2023–24: the ACCC found home and contents insurance in the rest of Australia increased by 18 per cent over that period.
“Insurers have indicated that a range of factors including building material and labour cost inflation and extreme weather events are contributing to the very high insurance premiums that consumers are facing,” Mr Crone said. “We have heard about a range of ways that households and small businesses are responding to high premiums, from increasing their excesses to reducing coverage. Many stakeholders were concerned that people were being left underinsured or were dropping insurance altogether.”
One of the pool’s original aims was to encourage insurers to enter or expand in northern markets by offering a more stable, lower‑cost means of managing cyclone exposure. The ACCC found little evidence this has substantially occurred: no new insurers have entered northern Australian markets since the pool began, and only modest changes have been made to cyclone‑specific embargoes, underwriting controls and exposure limits.
The report also flagged limited progress on private mitigation. Although most insurers have frameworks to recognise measures such as cyclone‑proofing, the ACCC said communication to customers about mitigation incentives is typically limited.
“Improving the resilience of properties and communities to natural hazards through better mitigation is a critical issue if risks are to be reduced and affordability improved, now and into the future,” Mr Crone said.
Background material in the report notes the pool, operated by the Australian Reinsurance Pool Corporation, provides reinsurance for cyclone and cyclone‑related flood risks covered by home, contents, strata and small business policies up to $5 million. Large insurers were required to join by the end of 2023 and smaller insurers by the end of 2024.
The ACCC has been directed to monitor prices, costs and profits of relevant insurance products and must report at least once a year from 1 January 2022 until 30 June 2026. The regulator brought forward this fourth report to feed into the government’s legislated review of the Terrorism and Cyclone Insurance Act 2003, which establishes the pool and is due to commence after 1 July 2025.
