The Australian Competition and Consumer Commission is pressing for more action on insurance affordability as climate change increases the frequency and severity of weather events and some homeowners and small businesses go without cover.

Chair Gina Cass-Gottlieb said today that the cyclone reinsurance pool is having a positive impact but savings have been offset to varying extents by cost pressures, and premiums remain “very high” for many Australians.

“We are optimistic that the pool can deliver some relief for those most at risk from cyclones, but the pool alone won’t solve the broader issue of insurance affordability more generally,” she told the Gilbert + Tobin Financial Services Forum.

“As climate change accelerates, it is reshaping not just our weather patterns but our entire approach to risk management.”

Ms Cass-Gottlieb says the ACCC believes there remains significant merit in many of its Northern Australia Insurance Inquiry recommendations, which aimed to improve the way insurance markets work for consumers.

“Other reports from government and industry have also reinforced the need for action,” she said. “We continue to work closely with government, industry and regulators to help ensure that communities facing the impact of climate change are not left behind, and that insurance remains accessible and affordable even in the face of mounting climate risks.”

The ACCC delivered its final report on northern Australia in 2020 after a three-year inquiry. Recommendations addressed making it easier to compare policies and choose the right level of cover, conflicts of interest, affordability, consumer rights and reducing risk and building better. 

The organisation has since been directed by the federal government to collect data and monitor pricing to evaluate the cyclone pool’s impact and assess whether savings in the targeted regions are being passed to policyholders.

Ms Cass-Gottlieb said global reinsurance markets are hardening, extreme weather events are becoming more frequent and building material and labour costs are rising.

“We continue to hear consumers say that the cost of insurance for their home or small business has become so prohibitive they’re forced to make difficult choices – either risk underinsurance or go without insurance altogether,” she said.

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