Allianz remains at odds with the industry view on disaster reinsurance pools, arguing that a “well-designed facility” could push down premium costs in northern Australia.

In a submission to the Australian Competition and Consumer Commission (ACCC) second update report on insurance affordability, Allianz backs mitigation but says it won’t be enough on its own.

The Insurance Council of Australia (ICA) and other major insurers are united in their belief that reinsurance pools are not the answer, and industry insiders fear that Allianz’s conflicting view could dilute the message.

Allianz says it backs ICA on the importance of mitigation and that it should be “the starting point in any discussion about the availability and affordability of insurance”.

“However, these measures will not result in affordable insurance for all consumers,” the submission says. “For example, Australia has a significant legacy of properties built in flood zones and not all flood risk can be mitigated.

“Even where mitigation could be effective, there would need to be sustained and substantial investment over decades which would not provide relief in the short to medium term for those consumer facing extremely high premiums.

“Allianz is of the view that an appropriately designed reinsurance facility would be an effective and efficient way of reducing the cost of insurance in a way that would not cause undue inconvenience to policyholders or disruption to insurance markets.”

While Allianz has made similar points in the past, ICA has consistently argued against government intervention in insurance markets, and previous inquiries have decided against progressing the reinsurance pool concept.

ICA declined to comment today on whether Allianz’s stance will make it harder for the industry to get its message through to government.

“Allianz is entitled to put forward a position on reinsurance pools,” ICA Head of Communications and Media Relations Campbell Fuller told insuranceNEWS.com.au.

“But the industry as a whole believes reinsurance pools deliver poor outcomes for taxpayers and consumers.”

ICA CEO Rob Whelan previously criticised the ACCC for examining “flawed ideas” such as reinsurance pools, mutuals and direct subsidies.

“These initiatives have been tried in other countries and have failed to address the fundamental issue of reducing the risks through better planning, building and mitigation,” he said.

“Insurance in northern Australia should not be subsidised by the rest of the nation; this would be unfair and unsustainable.”