The Australian Consumers Insurance Lobby (ACIL) is urging the Federal Government to take immediate action in response to Australian Competition and Consumer Commission (ACCC) findings regarding the Cyclone and Cyclone-Related Flood Reinsurance Pool, rather than wait for the 2025 review.
The lobby group said the full impact of the pool is still pending as insurers finalise their transition into the pool. Current data, however, suggests the intended reduction in premiums has not materialising as hoped, a news release said. The ACCC’s recent report, the release said, found that insurance premiums in Northern Australia remain “unacceptably” high despite the establishment of the pool.
ACIL’s own report into the pool titled Under the Lens: ACIL’s first evaluation of the Cyclone and Cyclone-Related Flood Reinsurance Pool published in September had also indicated the same concerns.
“While acknowledging some instances of reduced premiums, particularly in the strata sector, the overall lack of significant savings for consumers remains a pressing issue,” the news release said.
Five key recommendations were presented by the lobby group to Assistant Treasurer Stephen Jones, including “the integration of mitigation measures and the implementation of greater cross-subsidisation, aimed at achieving tangible reductions in premiums”.
ACIL said Jones just returned from a trip to Europe where he engaged with global reinsurers to support the notion that mitigation measures are essential in addressing the market failure in insurance.
“The latest report by ACCC reiterates the need for federal government action,” said ACIL chair Tyrone Shandiman (pictured above). “There are specific measures the current government can take to reduce premiums.”
Shandiman said the time for action is now.
ACIL noted it is committed to advocating for the rights and interests of consumers in Northern Australia and that it will continue to monitor the situation.
Shandiman, in his letter to the Assistant Treasurer, said that the Cyclone Reinsurance Pool was established in 2021 with an aim to make insurance more affordable for the residents of Northern Australia.
He said the ACCC findings, however, reveal insurance premiums increased instead of decreased. “This situation underscores the necessity for more direct and effective measures from the Federal Government,” he wrote.
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