The Australian Consumers Insurance Lobby (ACIL) has again pushed for a review of the cyclone reinsurance pool, saying the scheme’s premium setup means northern residents are subsidising free coverage for the rest of the country.

ACIL aired similar concerns last month in a report on the scheme’s performance since it commenced on July 1 last year. 

The Commonwealth-backed pool is designed to cover damage across the country, even for low-risk areas where no premium is charged.

Citing a Finity actuarial report, ACIL says the east coast illustrates the unfairness of the pool. Only policyholders located north of Port Macquarie are obligated to pay for the scheme.

“This isn't a matter of North vs South - it's about fairness,” ACIL Chair Tyrone Shandiman said.

“Our aim is to ensure that the North, already grappling with exorbitant insurance premiums, is not subsidising free coverage for southern regions of Australia that could have a claim.”

The Finity report prepared for the Australian Reinsurance Pool Corporation – which manages the scheme – said cyclone claims will be paid out for damage across any of the country’s 15,694 suburbs and that a “non-nil premium” will apply to 6083 suburbs.

Under the present arrangement the premium formula will apply to suburbs where non-trivial exposure to claims is expected. The majority of these suburbs are in northern regions and also more southern parts of WA.

Mr Shandiman says ACIL has raised its concerns with Assistant Treasurer Stephen Jones and has reached out to the Joint Select Committee on Northern Australia.

“It’s our job to advocate for fairness. My feeling is that when there are reviews of the pool we will have a good shot to put this issue forward,” Mr Shandiman told insuranceNEWS.com.au.

The pool is set for a review in 2025.

Major insurers must join the pool by the end of this year and most have already done so, including QBE, Suncorp, Hollard and Allianz. Smaller insurers have until the end of next year.