The Australian Consumers Insurance Lobby (ACIL) has called on the federal government to widen its reinsurance pool to include flood risks, following Brisbane City Council’s decision to revise its flood mapping next year.
The council announced that from Sept. 19, more than 17,000 properties will either be added to or reclassified within the flood overlay.
Over 10,000 will be listed for the first time, while about 2,000 will shift into higher-risk categories.
ACIL said many households are already reporting steep premium increases as a result.
ACIL chair Tyrone Shandiman said that rising premiums highlight the need for a comprehensive approach to affordability.
“While resilience is important, it is equally important that all solutions are considered – particularly if it can be demonstrated that those solutions improve insurance affordability and deliver better value for taxpayers. Expanding the reinsurance pool to include flood cover is one option that deserves serious consideration,” he said.
He argued that the upcoming review of the cyclone pool gives government a chance to consider structural reforms, particularly as some households are facing premiums in excess of $20,000 per year.
“When insurance is unaffordable, people are forced to go without or take out inadequate cover and that leaves taxpayers carrying the financial burden when disasters strike. The government cannot allow this to continue – it must act,” Shandiman said.
ACIL’s comments follow the release of the Australian Competition and Consumer Commission’s (ACCC) latest monitoring report, which reviewed the impact of the cyclone reinsurance pool.
The report, covering all eligible insurers now operating in the scheme, found that premium relief is starting to materialise in cyclone-prone regions.
According to the ACCC, the average home and contents premium in medium- and high-risk cyclone areas has fallen by 11% for each $100,000 sum insured since the pool began operating in 2022.
Some coastal centres, including Cairns, Mackay and Townsville, recorded typical reductions of about 15%.
Small business customers experienced greater relief, with average decreases of nearly one-quarter.
ACCC commissioner Peter Crone said the pool is achieving its core objective of moderating costs in the highest-risk areas, though he noted that overall affordability pressures persist.
Despite the reductions, insurance remains expensive across northern Australia.
The ACCC reported average annual premiums above $3,000 for home and contents in north Queensland and the Northern Territory, and above $4,600 in northern Western Australia.
Strata premiums are particularly high, averaging more than $18,000 in northern WA despite some significant decreases in locations such as Townsville and Karratha.
The commission also noted that insurer participation has not expanded since the pool’s introduction, with no new entrants to northern markets and only limited adjustments to underwriting practices.
While one aim of the pool was to encourage private risk reduction, the ACCC found little progress in linking mitigation efforts with premium discounts.
Most insurers have policies in place, but engagement with policyholders remains limited.
Shandiman welcomed the narrowing of the premium gap between northern and southern Australia but said more change is needed.
“The gap is beginning to narrow – but more must be done to deliver fair and affordable premiums for Australians in disaster-prone regions. We cannot accept the current gap – over 100% – as the new normal,” he said.
ACIL is advocating for expanded eligibility across more property types, inclusion of additional perils such as flood and bushfire, and greater government support for mitigation measures.
The ACCC’s findings add to ongoing industry discussion about climate risk. Independent modelling suggests that more than 650,000 properties nationally are already considered at high risk from climate-related hazards, while another 1.5 million face moderate exposure.
A separate analysis by Willis projected that insured losses from natural disasters are expected to again exceed $100 billion globally in 2025, continuing a trend of record losses in recent years.
