Cyclone reinsurance pool premium income fell below expectations last year as fewer properties took out insurance than assumed in modelling, and the projection for this year has been revised down by 27%, reports released last week show.

“While lower premiums are offset by lower claims, non-insurance is an important social issue, and ARPC will undertake further analysis to better understand levels and drivers of both non- and underinsurance,” an Australian Reinsurance Pool Corporation outlook says.

Gross written premium was $717 million for the year to June 30, compared with a projected $967 million, while the total claims cost of $155 million compared with a forecast $721 million.

The scheme reported an operating surplus of $436 million, compared with an anticipated $2 million deficit.

“Given the volatile nature of cyclone events, it is expected that financial outcomes will vary considerably from year to year,” the report says.

Five cyclone events were declared, with Jasper estimated to cost $91.3 million in claims and Kirrily $62.8 million. Some $16 million has been paid to insurance customers so far, the ARPC says in a separate annual report for the year to June 30.

By the end of June, 18 insurers had joined the cyclone pool, covering 98% of eligible home policies, almost all eligible strata policies and 87% of eligible SME policies.

The reports say earned premium for this financial year is projected to be about 27% lower than was originally expected, primarily due to the levels of non-insurance.

The ARPC annual report also shows the organisation had 225 insurer customers participating in the terrorism pool last financial year, with sums insured of about $4.4 trillion for commercial property and business interruption.

CEO Christopher Wallace says the terrorism retrocession program has been rolled over from 2023 but is now nearing the end of a three-year agreement.

“We are revising our reinsurance strategy to focus on the best value-for-money retrocession program we can achieve,” he said.

The pool has a claims funding capacity of $14.7 billion for a declared terrorism incident, including net assets, the $3.5 billion retrocession program with 70 global reinsurers and a $10 billion government guarantee.

The next legislative review of the scheme is due next year, then every five years, in a shift away from previous triennial reviews.