The Australian Consumers Insurance Lobby (ACIL) is calling on the Federal Government to provide assurances that Northern Australian residents and small businesses will not be left subsidising cyclone claims in southern parts of Australia under the Cyclone Reinsurance Pool.
The projected path of Cyclone Alfred—while ultimately causing less damage than expected—highlighted major flaws in the current modelling. There is a real risk that Northern Australians, the very people the pool was designed to assist, could be paying the price for a major cyclone event in Brisbane or even further south.
Interdecadal Pacific Oscillation (IPO) and Shifting Cyclone Risks
A key concern is whether the government has properly accounted for changes in cyclone risk patterns. Scientists believe that the Interdecadal Pacific Oscillation (IPO)—a climate cycle that operates over 15 to 30 years—may have shifted back into a negative phase around 2020–2022.
Historical data shows that the last prolonged negative IPO phase (1947–1976) coincided with increased cyclone activity in Southern Queensland and New South Wales, with at least one cyclone reaching Sydney. However, when the Cyclone Reinsurance Pool premium rates were set in 2022, Australia was not in a confirmed negative IPO phase.
ACIL is concerned that the current modelling may not reflect the increased likelihood of cyclones affecting southern regions, and Northern Australians could be left carrying the financial burden of claims from areas that were not originally factored into the pool’s risk profile.
No Cover Instead of Free Cover
Adding to these concerns, residents south of Port Macquarie do not contribute to the pool, yet they receive free cover. Cyclones have historically impacted areas beyond Port Macquarie, and there is a real risk that a major cyclone event further south would see Northern Australians unfairly footing the bill.
ACIL is calling on the government to urgently review the structure of the pool to ensure that:
Regions with cyclone risk contribute fairly to the pool, rather than some receiving free cover at the expense of others.
Alternatively, regions deemed to have a zero chance of cyclone impact should be excluded from the pool entirely, ensuring that only those who are contributing receive protection.
Government Must Provide Assurances on Premium Equity
“The Cyclone Reinsurance Pool was meant to improve affordability for Northern Australians, but there is a growing risk that they could end up paying for cyclones in the south,” said Tyrone Shandiman, Chairperson of ACIL.
“We are seeking urgent assurances from the Assistant Treasurer, Stephen Jones, that Northern Australians will not be left subsidising cyclone claims from other parts of the country. The government must ensure the pool operates fairly, with equitable premium contributions and long-term climate factors properly accounted for.”
ACIL urges the Federal Government to immediately review the pool’s modelling and pricing structures before Northern policyholders find themselves paying for a system that was meant to help them.
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