ARPC publishes cyclone reinsurance pool premium rates

ARPC publishes cyclone reinsurance pool premium rates

30 September 2024

Australian Reinsurance Pool Corporation (ARPC) has published revised premium rates for the Cyclone Reinsurance Pool (cyclone pool). The new premium rates will be effective from 1 April 2025, and will replace premium rates v2.0 (effective since 1 October 2022).

2024 Pricing Review Scope

The 2024 Pricing Review of the cyclone pool premium rates targeted the following:

• Ensuring premium rates are still meeting legislative objective for the policies that are now reinsured by the cyclone pool.
• Introduction of premium discounts for strata properties that have undertaken risk mitigation activities.
• Maintenance of the pricing algorithm to:
  • Rate for new addresses registered since the previous review.
  • Address insurer feedback to make the pricing algorithm more consistent with market practice.

2024 Pricing Review Conclusions

ARPC has reviewed premium rates by cyclone risk level. Current premium rates still achieve overall adequacy while also delivering the most benefit to medium and high risk properties, as intended by the legislation. The changes to the premium algorithm to Strata buildings introduced at this review are expected to incentivise mitigation.

Overall, the conclusion from the 2024 Pricing Review is that the legislative objectives of the cyclone pool continue to be met and, in the case of the strata mitigation discounts, further meet those objectives.

Strata mitigation discounts

Strata premium discounts have been introduced for qualifying mitigation activities, which include:

• Roof mitigation activities (including a full roof structure retrofit, the addition of fastened flashings on metal roofs and sarking under the tiles for tile roofs).
• Installation of permanent protection (for example shutters or screens) on all windows.
• Retrofit of vehicle access doors on low-rise Strata properties (built prior to 1982).
• Installation of gutter overflows.
• External door mitigation activity including solid cores on all timber door and external protection on balcony doors.

Consultation on cyclone reinsurance pool premium rates

The amendments to premium rates were subject to an industry consultation process which closed on 26 July 2024. ARPC thanks insurers that provided feedback to the consultation on cyclone reinsurance pool premium rates.

The feedback from the consultation has been considered as part of this review with amendments reflected in the Premium Determination Report. A summary of this consultation has been published below.

Please see links to the Premium Determination Report and the Consultation summary below.

For media enquiries, please contact Alexander Drake, Head of Public Affairs and Communications on (02) 8223-6777 or [email protected].

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