Insurer on-boarding – what you need to know

While the pool begins operating on 1 July 2022, insurers can enter into contracts with ARPC before that date.

Large insurers (as defined) will have until 31 December 2023 to reinsure all eligible cyclone risk with ARPC. This transition period is designed to provide insurers with sufficient time to manage costs and address any risks associated with transitioning from existing reinsurance contracts.

Please note: Consumer policyholders (for eg, home & contents, business and strata policyholders) do not join the reinsurance pool as this will be done on their behalf by their insurer.

Mandatory participation and transition

Participation is mandatory for general insurers with eligible policies. Large general insurers will be required to transfer their portfolio to the ARPC by 31 December 2023. Small general insurers i.e., insurers whose total gross written premiums for household insurance are less than $300 million for the financial year before 31 December 2022, will be required to transfer their portfolio to ARPC by 31 December 2024. All insurers can voluntarily join the pool from 1 July 2022.

During the transition period, insurers can progressively transfer their eligible cyclone policies into the reinsurance pool, or cede in the whole through a portfolio transfer, or a combination of both.

Lloyd’s underwriters are not required to participate in the cyclone reinsurance pool, however, if they choose to participate in the pool then they must reinsure on a ‘one-in all-in’ basis.

From 1 January 2024, insurers with eligible cyclone losses will be subject to the participation mandate.

Coverage of claims

For an initial period of three years from 1 July 2022, the pool will cover all of the cost of eligible cyclone and related flood damage claims above the policyholder excess to support insurer transition and maximise the potential premium reductions through the pool.

Backing from a $10 billion Commonwealth guarantee

The reinsurance pool will be supported by an annually reinstated $10 billion Commonwealth guarantee. Any shortfall in reserves built up over time will be paid for through the Commonwealth guarantee. If the $10 billion guarantee is likely to be exceeded by a single cyclone event or series of cyclone events within a single year, the Government will increase the guarantee if needed to support the pool to meet all its obligations.


The pool will be funded by charging reinsurance premiums to insurers that are consistent with the expected claims and operating expenses for the pool. Premium amounts for the cyclone reinsurance pool will be determined and set by the ARPC and reviewed by the reviewing actuary.

The pricing formula designed by the ARPC will:

  • be cost-neutral to Government over the longer term.
    • does not seek to make a profit, thereby increasing savings available to policyholders and insurers.
  • lower the reinsurance cost for most policies with mediumtohigh exposure to cyclone risk;
  • maintain incentives for risk reduction and offer discounts for properties that undertake mitigation.
    • encouraging policyholders to engage in strategies to mitigate cyclone and related flooding risks, the discounts will assist in improving the affordability and sustainability of property insurance over time

Reinsurance Contract

As mentioned above, insurers will be able to enter into contracts with the ARPC once the Bill has commenced and will be expected to have entered into a contract with the ARPC prior to the end of the relevant transition periods.

A draft version of the Reinsurance Contract will be provided to insurers.