The Australian Competition and Consumer Commission (ACCC) has released its fourth insurance monitoring report, revealing that the cyclone reinsurance pool established by the Australian Government has effectively reduced insurance premiums for customers in medium to high cyclone risk areas. However, despite these reductions, many consumers continue to struggle with high and rising premiums across the country.

Since the pool's inception in 2022, the impact on premiums has taken time to materialize. The ACCC's report indicates that average home and contents insurance premiums in medium to high cyclone risk areas have decreased by 11% compared to pre-pool levels. Small business premiums in these areas saw an even more significant reduction of 24%. Notably, regions such as north Western Australia and north Queensland experienced the most substantial decreases, with median premiums dropping by approximately 15% in key coastal cities.

Despite these positive changes for some consumers, the overall trend shows that insurance premiums remain high and are generally increasing across Australia. The average home and contents premium in north Queensland and the Northern Territory has surpassed $3,000 annually, while in north Western Australia, it exceeds $4,600. Strata insurance premiums are particularly alarming, with some areas reporting increases of up to 18%.

The ACCC attributes the ongoing high premiums to various factors, including inflation in building materials and labor costs, as well as the impact of extreme weather events. Many consumers are responding to these rising costs by increasing their excesses or reducing their coverage, raising concerns about underinsurance.

While the reinsurance pool was designed to encourage insurers to enter the northern Australian market, the ACCC found limited progress in this area. No new insurers have entered the market since the pool's establishment, and there is still a reluctance among insurers to expand their services in cyclone-prone regions. Furthermore, the report highlights a lack of effective communication from insurers regarding private risk mitigation, which is crucial for improving affordability and resilience against natural hazards.

The ACCC will continue to monitor the situation and provide annual reports until mid-2026, as mandated by the government, to assess the ongoing effectiveness of the cyclone reinsurance pool.