The Australian Competition and Consumer Commission (ACCC) says it may be “some time” before consumers see the full impact on premiums from the Federal Government’s cyclone reinsurance pool, with most major insurers only recently joining the scheme.

The ACCC is yet to see any significant widespread price effects from the pool, given large insurers had until the end of this year to join the scheme and small insurers are permitted a further 12 months.

“The cyclone reinsurance pool is still in transition. 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,” ACCC Commissioner Peter Crone said.

The ACCC today released its second annual monitoring report as part of its responsibilities to track the prices, costs, and profits of home, contents, strata, and certain commercial insurance before and after the introduction of the pool. The scheme formally took effect in July last year.

“We continue to hear about the financial pressures that consumers, strata owners and small businesses in northern Australia face to obtain the insurance they need,” Mr Crone said.

“While some consumers have expressed optimism about the potential impact of the pool and say they have experienced more choice and cheaper premiums, many others have told us how worried and frustrated they are about the impact of high and rising insurance prices on their homes and businesses.”

The report finds that for home and contents cover last fiscal year north WA had the highest average premium of $4395, an increase of 4%. Average prices in the NT rose 13% to $2922, while north Queensland premiums increased 7% to $2918.

In comparison, the rest of Australia experienced a 15% increase in average home and contents insurance premiums, with policyholders paying $1779.

In strata, average WA premiums were $14,439, the NT saw a 17% increase to an average $9826 and North Queensland premiums rose 8% to $9615. For the rest of Australia, the average strata premium rose 20% to $6181.

For higher value strata properties with sums insured over $4 million, those in north Queensland paid a median premium of $33,118, more than three times the median $10,535 for the rest of Australia.

For small business, the average north WA building and contents premium was $6287, up 22%, premiums in the NT were $3670 and in north Queensland $3095, while the rest of Australia experienced a 15% increase to $1930.

The report says that, for insurers, adjusting systems and existing reinsurance arrangements and implementing the cyclone pool in line with the government’s policy intent is complex.

The pool rules also don’t mandate a “one-to-one pass-through” of savings, which the ACCC says provides flexibility, while various approaches also make it more difficult to assess the extent of the pool’s impact on premiums.

“The way that insurers are choosing to approach the pass-through of any savings to consumers, both as they implement the pool in the short term and as they adapt their systems over the longer term, may directly impact the effectiveness of the pool in achieving savings for consumers at high cyclone risk,” the ACCC says.

“Similarly, individual insurers’ capability and determination to reward consumers for private risk mitigation investments will also influence the extent of savings the pool will generate for consumers.”

Some insurers have also raised concerns over the way in which scheme discounts are applied for mitigation efforts such as roof improvements, window protection and roller door bracing.

The report notes an Allianz decision to extend cover in areas at risk of cyclones, but the ACCC says it’s too early to determine the extent to which insurers may expand cover as a result of the pool.