The Australian Consumers Insurance Lobby group has pressed again for changes to the way the cyclone pool scheme models risks facing residents in the northern and southern regions. 

ACIL says the modelling used by the scheme administrator, the Australian Reinsurance Pool Corporation, fails to account for historical cyclone events or even future cyclone events that could potentially strike new areas. 

The lobby group says its position has not changed since last year, after it released a report flagging alleged shortcomings in the modelling used to determine premium rates. 

“ACIL firmly believes that the pool holds the potential to significantly alleviate the financial burden faced by residents in cyclone-prone areas of northern Australia,” the group said in a submission to the ARPC. 

“However, to fully realise this potential, it is crucial that the pool operates with fairer modelling supported by proactive mitigation strategies.” 

ACIL says there will be “potential political fallout and considerable rigorous scrutiny” on ARPC and Treasury if a cyclone affects population centres that have not contributed to the pool. 

“Should a major cyclone event occur in southern regions, residents in northern Australia will justifiably be outraged at the prospect of subsidising cyclone coverage for the south without receiving similar contributions in return,” the submission said. “Questions will rightfully be raised about why northern policyholders are paying to subsidise free cover for those in the south.” 

ARPC is reviewing cyclone premium rates and considering minor changes which would be applicable from next April. 

The cyclone reinsurance pool started on July 1 2022, with the first insurers joining on January 1 2023. 

ACIL says it backs the ARPC’s proposal to offer mitigation discounts on eligible strata policies. ARPC is considering strata rate discounts on wind premiums to improve incentives to reduce and mitigate risk through reduced reinsurance premiums. 

“We recommend that ARPC implement discounts for strata buildings that conduct pre-storm season roof inspections and comply with established criteria,” the submission said. “ARPC should seek advice from a roofing specialist to develop a checklist and compliance criteria.” 

The ARPC consultation closes on July 26. 

Click here for the consultation paper.