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Consumers facing long wait for cyclone pool savings

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Consumers may face an extended wait before seeing premium benefits from the introduction of the northern Australia cyclone reinsurance pool, a lobby group has warned.

The Australian Reinsurance Pool Corporation (ARPC) is continuing to work with insurers to finalise pricing and other arrangements after the previous Federal Government set a July 1 start date for the scheme.

But the timeframe for it to take full effect is longer, with large insurers given until December next year to have all eligible policies transferred into the pool, while small insurers have until the end of 2024.

Northern Australia Insurance Lobby (NAIL) Chairman Tyrone Shandiman says it’s expected some insurers will take full advantage of the timeframes, and it’s unlikely insurers would be able to implement the pool to consumers beginning next month.

“Given the affordability issues being currently experienced, we know this news may come as a disappointment to consumers,” Mr Shandiman said.

Insurers say they are continuing to work with the ARPC on aspects including pricing, regulatory frameworks and alignment with other commercial reinsurance arrangements for non-cyclone risks.

“Further, existing commercial reinsurance treaties will need to be renegotiated,” an Insurance Council of Australia spokesperson told insuranceNEWS.com.au. “These negotiations, and the provision of reinsurance pricing, will be required to fully understand the impact on premiums for households and small businesses.”

Current Financial Services Minister Stephen Jones told insuranceNEWS.com.au the previous government “denied Labor the opportunity to participate in the design of this scheme and declined to share details of its proposed operation”.

“I am now engaged in a consultation process to better understand it and will have more to say when that process is complete,” he said.

The Morrison Government said northern Australian households could see premium savings of up to 46%, strata developments up to 58% and SMEs up to 34%, but declined to release the modelling due to commercial and Cabinet confidentiality.