Australia’s Cyclone Reinsurance Pool (CRP) has delivered notable relief to households and businesses in Northern Australia by reducing pressure on soaring insurance premiums. Yet, according to the Insurance Council of Australia (ICA), far more must be done to build climate resilience and embed long-term risk reduction strategies if insurance costs are to remain sustainably affordable.
In its submission to the statutory review of the Terrorism and Cyclone Insurance Act 2003, the ICA emphasised that the CRP should not be viewed as a standalone solution. Instead, it must operate as part of a wider national framework that prioritises mitigation, stronger building standards and infrastructure capable of withstanding increasingly severe cyclonic events.
This government-led review, the first since the CRP was launched in 2022, is examining whether the scheme has truly improved insurance accessibility and affordability in regions most vulnerable to cyclone damage. Since its inception, the CRP has helped reduce premiums significantly, with the Australian Reinsurance Pool Corporation estimating savings of up to 39 per cent for properties in the highest-risk categories.
Insurance availability has also improved. Home insurers are now providing more quotes across every risk band, with a 27 per cent rise in accepted quotes for the most vulnerable areas. Even so, the industry stresses that premium reductions alone will not counteract the escalating threat of extreme weather.
In a recent media statement, the ICA called for deeper alignment between the CRP and long-term mitigation programmes. This includes building a comprehensive evidence base to support accurate risk-based pricing and guide future investment decisions. The organisation stresses that while the CRP can redistribute risk, it cannot eliminate it — and the underlying danger posed by severe cyclones continues to grow as climate patterns shift.
Australia faces a similarly urgent challenge with floods. According to ICA figures, 1.36 million properties are at some level of flood risk, placing immense strain on affordability. The ICA argues that only a coordinated, system-wide response — blending financial incentives, infrastructure development and community engagement — will deliver genuine, lasting results.
ICA Deputy CEO Kylie Macfarlane said:
“Insurers are passing on savings from the CRP to policyholders, who are seeing improvements in insurance affordability and availability, particularly in areas facing the highest cyclone risk. But more work must be done to better align the CRP with risk mitigation by leveraging data on what works and investing in risk reduction.
“Extreme weather continues to intensify, requiring genuine partnership between government and industry to reduce risks and protect communities. Insurers are working with all levels of government on solutions that deliver long-term improvements to community safety and insurance affordability.”