Like the famous “show me the money” quote from the Jerry Maguire movie, at the moment it’s a case of “show me the modelling” when it comes to benefits promised from the northern Australia cyclone reinsurance pool.

At this stage it seems the modelling may need magical powers to deliver on expectations raised by the Government for the scheme, as many express doubts, while hoping for the best.

Legislation introduced into Parliament, minus the pricing details, has been a landmark event following a decade of debate over the need for a catastrophe pool to assist disaster prone-regions in the north. The question now is how well will it work, and even will it work at all.

No-one knows how effective it will be, with pricing and modelling details underpinning the reinsurance scheme yet to be revealed, while the Government has upped the ante in promoting the potential savings.

Assistant Treasurer Michael Sukkar says over 10 years the pool is estimated to reduce premiums by $2.9 billion, which compares to anticipated savings of about $1.5 billion when the original pool announcement was made last year.

Homeowners in northern Australia with the most acute cost pressures are expected to benefit from up to 46% premium discounts, strata properties up to a 58% and SMEs up to a 34% discount, the Government says.

North Queensland Insurance Brokers Director Ron Bellert says if a premium collection base is too narrow, and is based on certain postcodes, then prices will go up, while the broader the base, the more likely it is that savings will be delivered.

Policyholders are already asking about the pool savings, as their premiums keep soaring, but the percentage level discounts promised seem a stretch at this stage, he says, while trying to remain positive.

“We don’t have the modelling yet, but based on what we have seen, I would find it very difficult to see how that is going to occur,” he told the National Insurance Brokers Association (NIBA) convention.

Some policyholders in the north are still seeing premium increases of 50, 100 and 200% and strata properties are seeing $200,000 cyclone excesses, the NIBA Convention heard.

Without the modelling, and taking into account the pool parameters, many people are scratching their heads, and wondering about the impact of those raised expectations on insurers and brokers on the front line.

“There seems to be a lot of limitations being put on the pool and what it can do,” one industry source told insuranceNEWS.com.au, adding there will be pressure on the industry after the election “to do what has been projected”.

How the pool will dovetail with existing reinsurance programs remains unclear. Motor isn’t included, nor other monsoonal storm damage, or flooding caused by former cyclones after the pool’s qualifying time cut-off. Commercial sum insured limits of $5 million are considered too low by many.

Capital Innovation Insurance Group Queensland Director Steven Hill says it will take six months for insurers to build the reinsurance pool into their pricing once they have the details, even though it’s meant to start on July 1.

Despite the shortcomings, the Northern Australia Insurance Lobby, representing various types of policyholders, notes the legislation now before Parliament has made improvements on the draft bill and it is worth supporting in its current form, given a review is promised

“A review after twelve months by the Federal Government ensures that any unaddressed, and ongoing, insurance market failures in northern Australia will be considered by the Australian Reinsurance Pool Corporation,” Co-Chairman Tyrone Shandiman says.

The Strata Community Association has also called for the legislation to be passed by Parliament as soon as possible to ensure something is in place and to end the uncertainty.

“Residents of Northern Australia have faced a decade long struggle for a reinsurance pool and premium relief and to see this light at the end of the tunnel extinguished would be devastating for those communities,” Queensland President Kristi Kinast says.

Whatever happens with the election, a number of the cyclone-prone seats are marginal and both sides of politics are seeking to curry favour with residents hit by crippling insurance premium increases.

Labor MP Matt Thistlethwaite told Parliament that the party supports the bill and will move ahead with a pool if it forms Government after the election

“If Labor is elected, not only will we ensure that the reinsurance pool is put in place but we will make sure that priority is given to the north of Australia in investing in mitigation infrastructure projects,” he said during debate in the House of Representatives.

In the meantime, Labor also wants the modelling behind the Government’s savings assertions publicly released.

“We believe that the people of the north of Australia - households, businesses and consumers - have the right to know what these claims are based upon,” Mr Thistlethwaite said.

Gaps in the pool’s reinsurance cover for northern Queensland are also the tip of the iceberg, with many people pointing out that other parts of the country are increasingly exposed to the impacts of catastrophes, including flooding and bushfires.

If the cyclone reinsurance scheme does produce savings, there will be pressure for the pool to be extended further in various ways in future, or modified to improve benefits. If it delivers very little, long-term critics will be shaking their heads and saying that it was never going to work.