The Federal Government cyclone pool has started delivering strong savings in high-risk areas and is encouraging some insurers to write more business in the north, an Australian Reinsurance Pool Corporation (ARPC) executive says.

ARPC Chief Claims and Customer Officer Jason Flanagan says it’s still early days for the pool, but indications point to strong savings in areas considered most at risk and some expected savings in the medium risk areas. 

As of July 1, nine insurers had joined the cyclone reinsurance pool, operated by the ARPC, one insurer has since joined and another major insurer is expected to come on board by the end of this year. 

Large insurers were given until the end of December to join the pool while smaller firms have an additional 12 months. 

“We are seeing cost savings coming through to the end consumer and more insurers starting to participate in northern Australia,” Mr Flanagan told the Insurance Council of Australia Annual Conference. 

As of July 1, about $1.3 trillion of assets were insured through the pool. The cover included 2.6 million homes, 23,000 strata properties and 71,000 small businesses. 

Mr Flanagan says the pricing formula rewards risk mitigation actions, such as roof tie-downs and window shutters, but the percentage uptake so far hasn’t been high. 

More education generally is needed around the benefits of resilience spending, including across consumers, local businesses and local councils, he said during a panel discussion on insurance affordability. 

“Insurance is not very widely understood in the general community, not just with end consumers,” he said. “And that’s an opportunity for us.” 

The pool covers cyclone damage and related flooding for the period from when a cyclone begins until 48 hours after it ends, based on Bureau of Meteorology notifications.