On Friday 7th February, Chairperson Tyrone Shandiman had the opportunity to appear before the Joint Select Committee for Northern Australia’s Cyclone Inquiry. Representing consumers, we highlighted the successes of the Cyclone Reinsurance Pool but also called for critical improvements to ensure it delivers its full potential.
Watch the full inquiry here: https://www.youtube.com/watch?v=7Wrgx_S9kqs
ACIL appears at the 1:11 mark.
Here’s the opening statement delivered by ACIL Chairperson Tyrone Shandiman at the inquiry:
Thank you for the opportunity to appear before the committee today on behalf of the Australian Consumers Insurance Lobby (ACIL). It is a privilege to represent an organisation that has been at the forefront of advocating for fairer insurance outcomes for consumers, particularly in Northern Australia.
While at times our stance may have been perceived as critical, our advocacy has always been driven by one objective—ensuring that the pool delivers the best possible outcomes for consumers.
It is encouraging to see the pool, now over two and a half years since its inception, delivering meaningful result. We have seen large strata buildings, previously reliant on the insurer of last resort, Lloyd’s of London, achieve significant premium reductions. For example, Whitsunday Waters Resort, which was paying $334,000 in premiums, has seen costs drop to $87,000—a 73% saving. These are real, tangible benefits that make a difference to homeowners and communities.
ACIL firmly believes that the Cyclone Reinsurance Pool is the right mechanism to generate the savings consumers need. The framework is sound, but with some targeted refinements, the pool could deliver even greater benefits. That is why we are here today—to advocate for critical improvements, including:
Fairness in modelling, ensuring it accounts for both historical data and future climate change projections.
Using surpluses for mitigation, with a call for this committee, ARPC, or Treasury to commission an actuarial report quantifying the cost-benefit of mitigation measures to support informed decision-making.
Expanding eligibility criteria to allow more consumers to access the pool’s benefits.
Addressing gaps in coverage, particularly around flood events
Greater transparency in rate setting, so consumers understand how premiums are determined.
I hope to expand on these issues further during today’s discussions.
I also want to address the role of insurers in this issue—because consumers have been let down time and time again. The industry’s conduct has been frustrating, and at times, outright obstructive:
In 2015, when the Northern Australia Insurance Premiums Taskforce was created, the industry claimed there was no market failure and that a reinsurance pool would be unworkable. How ironic it is now to see those very arguments fall apart with time.
The industry has made misleading claims—such as the assertion that including marine insurance in the pool would only have a 5% impact on consumers, while marinas in your electorates are paying three to four times normal premiums with cyclone excesses of $500,000.
Delays in insurer participation meant that consumers did not see the benefits of the pool as quickly as they should have.
Even after joining the pool, insurers continue refuse to insure new business in certain sectors such as strata. Allianz and Chubb, for example, still refuse to underwrite new strata business, while the industry justifies this by essentially saying, "they might have to pay a claim"—which, of course, is the entire purpose of why they are in business.
Beyond the Cyclone Reinsurance Pool, the industry continues to fall short on consumer protections, with current proposed changes to the three year General Insurance Code of Practice failing to address systemic issues exposed in government inquiries and industry reports. The response so far can best be described as superficial changes and window dressing.
This behaviour only reinforces the reality that the insurance industry cannot be trusted to regulate itself or put consumers first. Their submissions are driven by profit motives—not by the needs of policyholders.
This is why ACIL was formed—because consumers needed a voice in an industry that consistently prioritises profits over fairness. We urge you, as elected representatives, to see past the industry’s rhetoric and act decisively. Consumers are relying on you to ensure that the insurance market—an essential service—meets their needs. We have faith that you will rise to this challenge, because if the past decade has taught us anything, it’s that the industry will not fix these problems on its own.
Thank you, and I look forward to your questions.