RACQ Insurance has warned that home premiums will remain high as it becomes the latest underwriter to join the Federal Government’s cyclone reinsurance pool.

CEO Insurance Trent Sayers says that while RACQ supported the introduction of a pool, and all benefits will be passed on to members, the model’s design and implementation means it will only deliver marginal benefits to those living in the north. 

“This is a disappointing outcome, and with a review scheduled for 2025, RACQ will continue to recommend changes to the pool’s design that will achieve maximum benefits for homeowners,” he said.

“Any benefits the pool will provide will be more than offset by the affordability challenges facing the insurance industry, such as growing climate risk and inflation including significant increases in labour and building material costs.” 

Mr Sayers says limitations include that it provides partial cyclone cover, with other reinsurance still needed to cover the gaps, while it also comes with implementation costs including ongoing regulatory requests for information and system changes.

“The pool is just one measure - more needs to be done to better protect Queenslanders such as the removal of stamp duty, increasing disaster mitigation infrastructure, home upgrades and stronger land planning and building rules,” he said. 

RACQ says the time limit for the pool’s cover should be extended beyond two days after a system becomes an ex-tropical cyclone as the later period is when many weather systems cause most damage.

Large insurers have until the end of this year to join the pool, which is run by the Australian Reinsurance Pool Corporation. Smaller insurers have an additional 12 months.