The Federal Parliamentary Joint Select Committee on Northern Australia will this month hold a one-day hearing into the cyclone reinsurance pool to consider changes needed for the scheme to operate more quickly and effectively in reducing premiums.
Committee Deputy Chairman Warren Entsch says the hearing will take place on November 25 and recommendations will be developed to encourage insurers to participate in the pool as soon as possible, and for benefits to be delivered to people facing insurance affordability and accessibility problems.
“There are already things I have become aware of that need to be dealt with,” he told insuranceNEWS.com. “We have a reinsurance pool that is ready to go, let’s do what we can to make it work.”
Mr Entsch, a long-time insurance pool campaigner and Liberal National Party member for the northern Queensland seat of Leichhardt, says he has spoken with Treasury, the Australian Reinsurance Pool Corporation (ARPC) and Government representatives.
The cyclone reinsurance pool came into existence on July 1 but insurers are yet to sign up and under the scheduled timeframe large providers have until the end of next year and smaller underwriters until December 31 2024.
Mr Entsch says issues that have been raised include plans for the pool to be revenue neutral on an annual basis, rather than over a longer period, while the short 48-hour period for flood cover after a cyclone ends is too restrictive.
“There are a number of practical things, and basically asking the insurance companies what are the changes we need to make to encourage them to come in sooner,” he said. “There is no-one in it at the moment, and I want to know why, and let’s fix it.”
Mr Entsch says insurance accessibility and affordability remain critical issues in northern Australia as prices continue rising, and getting the cyclone pool fully functional should be a priority before any wider scheme is considered.
“We accept you might pay a little more here than somewhere else, but not 1000% more, because that is saying it is not available,” he said.
The committee is expected to hear from representatives from the ARPC, Treasury, the Insurance Council of Australia (ICA), insurance companies and the Australian Consumers Insurance Lobby (ACIL). Participants are also invited to make a submission to the inquiry.
ICA confirmed it would be appearing at the committee hearing and sending a written submission. “The ICA is committed to working with the Government to improve affordability and availability of general insurance for all Australians, particularly those in northern Australia who are vulnerable to worsening extreme weather impacts as a result of climate change,” a spokesperson told insuranceNEWS.com.au.
ACIL has previously called for cross subsidisation to deliver greater benefits and has been critical of the lack of transparency for consumers, and that savings indicated recently won’t be at the level previously promised.
The cyclone reinsurance pool legislation was introduced by the Coalition early this year and passed before the election, but Mr Entsch said he welcomed cooperation from the current Government. Assistant Treasurer and Financial Services Minister Stephen Jones formally referred the issue to the select committee for inquiry.
The terms of reference say “the Joint Select Committee on Northern Australia shall inquire into and report on the operation and implementation of the cyclone reinsurance pool”.