ARPC has published revised premium rates for the Cyclone Reinsurance Pool (cyclone pool) which commenced operations on 1 July 2022.
The cyclone premium rates that insurers will pay to the cyclone pool were revised after a consultation period on the initial rates was extended with new rates due for release by 1 October 2022.
As a result, $776 million in annual premiums will now be collected by the cyclone pool, a 10 per cent, or $91 million reduction in premiums, from $867 million.
The $91 million reduction in premiums is comprised of the following:
|Revised risk assessment for Western Australia:||– $45 m|
|Revised risk assessment for strata buildings:||– $17 m|
|Increase to non-insurance assumption in high wind risk regions:||– $29 m|
|Total:||– $91 m|
The pricing formula designed by ARPC is designed:
- to be cost-neutral to Government over the longer term
- not to charge a profit margin, thereby increasing savings available to policyholders and insurers
- to lower the reinsurance cost for most policies with medium-to-high exposure to cyclone risk
- to maintain incentives for risk reduction and offer discounts for properties that undertake mitigation, and
- to encourage policyholders to engage in strategies to mitigate cyclone and related flooding risks, while the discounts will assist in improving the affordability and sustainability of property insurance over time.
Pricing responsibility stays with insurers
Responsibility for setting insurance premiums stays with insurers, and they are responsible for commercial decisions on how they set them.
Costs may be affected by other factors, including changing calculations of risk, changes to labour costs, and changes in building costs.
The Australian Competition and Consumer Commission will use its price monitoring powers to collect data to assess whether the savings from the reinsurance pool are being passed through to policyholders.
Please see links to important documents below:
Premium Rates – October 2022
- ARPC CRP Premium Rate Assessment Report – reissued 8 July 2022(.PDF)
- ARPC – Premium Rate Assessment Report Update for Consultation – 1 October 2022(.PDF)
- ARPC CRP Flood Analysis Report 30 June 2022(.PDF)
- ARPC – Implementation and Pricing Structure Guide – as at 01 Oct 2022(.PDF)
- ARPC – Implementation and Pricing Structure Guide – Appendix B – Subsection 8A (7) Postcode List – as at 1 October 2022(.xlxs)
- ARPC – Implementation and Pricing Structure Guide – Appendix C – Rating Definitions – as at 1 October 2022(.xlxs)
July 2022 consultation
- ARPC CRP Premium Rate Assessment Report – reissued 8 July 2022 (.PDF)
- ARPC CRP Flood Analysis Report 30 June 2022 (.PDF)
- ARPC – Implementation and Pricing Structure Guide – as at 01 July 2022 (.PDF)
- ARPC – Implementation and Pricing Structure Guide – Appendix B – Suburb List Exception – as at 01 July 2022 (.xlxs)
- ARPC – Implementation and Pricing Structure Guide – Appendix C – Rating Definitions – as at 01 July 2022 (.xlxs)
The ARPC cyclone Reinsurance Agreement for Eligible Cyclone Loss has been adjusted to allow Lloyds Underwriters to enter into the Agreement with ARPC via their managing agent. This also provides Lloyd’s underwriters and unauthorised foreign insurers with the same options as general insurers under s8 (1)(a).
The updated Agreement: