Queensland-based insurers pushed the case for an extension of the cyclone reinsurance pool’s cover at a federal parliamentary committee hearing today.

Sure Insurance MD Bradley Heath said an extension from a 48-hour window after the end of a declared event to a 168-hour – or one week – cut-off could be achieved through regulation rather than requiring a change to the legislation.

“It is my firm belief that the ‘prescribed duration’ of 48 hours should be amended to allow for the likely entirety of a single weather event to be covered by the cyclone pool,” he told the Joint Select Committee on Northern Australia.

Mr Heath said Sure Insurance losses from Cyclone Jasper last summer were more than $94 million, but under the current duration limit only 22.8% of the total would be recovered from the pool, whereas the 168-hour limit would have allowed 99.3% to be recoverable. 

“The question is, how has this scenario impacted the cost of insurance for Sure customers?” he said in an opening statement.

“Unfortunately, the answer is in direct conflict with government’s current cost-of-living relief efforts, with premium increases of 20%-plus being immediately requested by Sure’s capacity providers when it was apparent that the larger majority of this loss would not be recovered from the cyclone pool.”

Sure and RACQ have highlighted that international commercial reinsurance market cover is centred on the week-long period.

RACQ Group CEO David Carter said the insurer continues to push for the time extension, inclusion of motor and a rethink on budget-neutrality rules to allow opportunities for subsidisation to be explored. 

“We are still required to price for cyclone-related damage that is not covered by the pool. For Jasper, this is 68% of total claims,” he said.

“Our reinsurers – who we are engaging this quarter for our next renewal – are pricing for this friction and risk. Reducing friction, and reducing risk, will impact premiums in north Queensland.”

Queensland MP Warren Entsch asked Mr Carter if the pool should be extended to cover the type of monsoonal tropical lows that caused flooding in the Ingham and Townsville region in the past week. 

Mr Carter said the priority is improving resilience and investing in mitigation, and an extension of the pool to floods would require design changes to make it more effective.

“If it was designed the way the current cyclone pool is designed, where there’s no cross-subsidisation, the benefits in terms of premiums would be reasonably subdued,” he said. “It would improve the accessibility of insurance so [there would] probably be more competition, but it may not achieve an outcome of lower premiums for those in even medium-risk flood zones.”

Earlier, Insurance Council of Australia CEO Andrew Hall said making the cyclone pool more effective requires clearer links to reducing risks through resilience and mitigation. Mr Hall highlighted the increased insurance cost burden from state insurance taxes and the lack of money that goes back into resilience, and urged the committee to use its influence to “shift the paradigm”.