ARPC releases revised premium rates for cyclone pool
29 Sep 2022
Australian Reinsurance Pool Corporation (ARPC) has today published its revised premium rates for its Cyclone Reinsurance Pool (cyclone pool), which commenced operations on 1 July 2022.
The cyclone premium rates insurers will pay to the cyclone pool were revised after a consultation period on the initial rates was extended, with new rates to be effective as of 1 October 2022.
As a result of additional information being provided by insurers, $776 million in projected annual premiums will now be collected by the cyclone pool, a 10 per cent or $91 million reduction in projected premiums, from $867 million.
Lower premiums paid by insurers to the cyclone pool will ultimately result in lower premiums for consumers.
Savings are expected to be higher in Northern Australia than in other areas, consistent with the policy intent behind the cyclone pool and the way the premium rates have been designed. In addition, policyholders currently paying the highest premiums should also see the greatest savings.
The pricing formula means ARPC, and the pool remain committed to:
- being cost neutral to government over the longer term
- not charging a profit margin, thereby increasing savings available to policyholders and insurers
- lowering the reinsurance cost for most policies with medium-to-high exposure to cyclone risk
- maintaining incentives for risk reduction and offer discounts for properties that undertake mitigation and
- encouraging policyholders to engage in strategies to mitigate cyclone and related flooding risks, while discounts improve affordability and sustainability of property insurance over time.
The revised rates will come into effect for larger insurers that write home, strata, or SME insurance in cyclone-prone regions no later than 31 December 2023, and for smaller insurers no later than 31 December 2024. Consumers should see premium savings after that, as they renew their insurance.
The responsibility for setting insurance premiums stays with insurers and they are responsible for commercial decisions on how they set them.
More information on the revised premium rates can be on the Premium Rates page.
Media Contact: Alexander Drake, Head of Public Affairs (02) 8223-6777