Insights from the Cyclone Reinsurance Pool Final Report

In response to the increasing risks posed by cyclones and related weather events, the Cyclone Reinsurance Pool was established to provide a more stable and affordable insurance market in vulnerable regions.

The final report, released in March 2025, outlines key recommendations for further strengthening the pool’s effectiveness. 

One of the more significant questions to be investigated in this report was whether or not the Cyclone Reinsurance Pool ought to be expanded to cover other natural disasters such as floods. 

This question has come up again and again in a number of recent reports. the Senate Select Committee on the Impact of Climate Risk on Insurance Premiums and Availability, in its final report tabled in November
2024, "heard from a wide range of stakeholders who support[ed] the expansion of an improved reinsurance pool to cover other regions and types of disasters."

The inquiry into insurers' responses to the 2022 major flood claims also noted in its final tabled report that many inquiry participants supported further investigation into the feasibility of a reinsurance pool for flood.

However, in its key recommendations, this report doesn't make a firm decision on the matter, instead leaving the decision to expand the Reinsurance Pool up to a proposed legislated review to be undertaken later in the year. 

Key Recommendations from the Report 

The final report lists targeted recommendations to enhance the effectiveness of the Cyclone Reinsurance Pool and ensure its long-term viability as below. 

• Legislated Review: The report recommends Australian Government must proceed with the planned legislated review of the Cyclone Reinsurance Pool in 2025.
• Publish Modelling: The committee recommends that the Australian Government publish
  modelling on the cost and benefits of the inclusion of marine insurance in the Cyclone Reinsurance Pool.
• Permanent National Resilience Program: The committee strongly recommends that the Australian Government support an ongoing, national resilience program on a permanent basis.
• Improve Resilience and Mitigation of High-Risk Homes: To improve resilience and mitigation of high-risk homes in Northern Australia through targeted tax offsets and direct subsidies to eligible households. 
• Investigate Impact of Tax on Premium Pricing: The Australian Competition and Consumer Commission (ACCC) to investigate the impact of current taxation on insurance premium pricing.
• Ongoing Monitoring: Fund the ACCC to monitor the Pool until at least 2030.
• Expand the Remit of the ACCC: Give the ACCC more power to examine if insurers are reducing premiums in response to mitigation and resilience measures. 

Conclusion 

The Cyclone Reinsurance Pool represents an important step toward helping put downward pressure on premiums in cyclone-prone regions. The recommendations in the final report aim to provide a roadmap for improving long-term sustainability in the face increasing risk from natural disasters in Northern Australia. 

Read the full final report here.