Insurance prices remain high, with Cyclone Reinsurance Pool yet to have an impact, reveals ACCC

Last week, the Australian Competition & Consumer Commission released its second annual insurance monitoring report. The report highlights that insurance premiums – especially in areas such as home, strata and for small businesses – were much higher in the region of northern Australia than compared to other parts of the country in 2022-23.  

Another key insight from this report is that the Cyclone Reinsurance Pool is yet to have any significant downward impact on insurance prices. However, it might be too early to assess the impact of the Pool, since a number of insurers have come on board only post July 2023.  

As per the given timeline, large insurers are mandated to join the Pool by the end of 2023, and smaller insurers have a deadline of the end of next year. So far, 13 insurers have come on board.

The ACCC Commissioner Peter Crone acknowledged that it may be too early to tell whether the Pool has had any real impact on insurance premiums.  

 “The Cyclone Reinsurance Pool is still in transition,” he said.  

“The combination of insurers entering the pool at different times, the time required for insurers to fully implement pricing changes, and differing policy renewal cycles mean that consumers may not see the full impact of the pool on their premiums for some time. 

“There is also a range of other factors impacting insurance premiums, such as higher building replacement costs and global reinsurance market conditions. 

“And as we know, a changing climate is expected to exacerbate extreme weather events in future,” Mr Crone said. 

ACCC’s report outlined the average premium costs for consumers across Australia in home and contents, strata, and small business building and contents insurance.  

Home and contents insurance 

Average home and contents insurance premiums have experienced an increase all over Australia in 2022-23. Consumers in North Western Australia are paying the highest average premiums at $4,395.  

Meanwhile, consumers across the rest of the country have experienced a rise of 15% in their premiums.  

Strata insurance 

Much like home and contents, figures related to strata insurance tell a similar story. Consumers in North Western Australia are paying the highest average premiums in the country at $14,439.  

Australians living in other parts of the country are paying an average strata premium of $6,181, and have experienced an increase of 20% in 2022-23.  

With properties that have a sum insured above $4 million, Queenslanders are paying the highest median premiums at $33,118, which is “three times the median price” when compared to the rest of Australia.  

Building and contents insurance in small business 

A similar story unfolds here as well. North Western Australia had the highest small business building and contents insurance average premiums at $6,287. This makes for an increase of 22%, compared to an increase of 15% when compared to the rest of the country.  

You can read the full ACCC report here.