RACQ supports a Cyclone Reinsurance Pool and we have repeatedly expressed that support in numerous written submissions and public comments.

In fact, with every year the disaster risk grows in Queensland, so too does our support and the need for a well-designed pool.

As a proud Queensland mutual financially protecting our members’ assets, we are more exposed to the state’s extreme weather than other insurers who underwrite more broadly across the country. Our reinsurance needs, and the costs of purchasing additional cover required, are different as a result.

But RACQ believes the pool as legislated could be a lot better and we’ve been at pains to highlight our concerns since the draft Bill came out nearly 12 months ago.

RACQ simply wants the best pool possible for our 300,000 members who call north Queensland home.

Whilst Government modelling indicates that less than 2% of homeowners in northern Australia may get a premium reduction of 32% per cent, this does not reflect the benefit that could be achieved from a redesigned scheme.

We believe the greatest opportunity to achieve maximum benefit to homeowners is for the Committee to consider four key changes, namely:

1. Challenge the principle that the pool must be budget-neutral and investigate opportunities for Government subsidisation of the pool, or direct subsidisation to homeowners.

2. Expand the pool to cover all types of floods as flooding is emerging as a more frequent, high risk, and significantly costly peril for Queensland and Australia.

3. Replace the “48-hour claims period” with a 7-day provision, in line with commonly accepted definitions in current reinsurance contracts with the global market and

4. Expand the pool to cover motor insurance because the exclusion of motor will add uncertainty, complexity and cost to the system.

These changes will reduce inefficiencies and costs and improve the pool for the benefit of homeowners.

We also believe the Government should set a desired target for premium reductions to be delivered by the pool so insurers can provide input into the changes necessary to achieve that objective.

We need further consultation with Government to flesh out these opportunities if there is a serious commitment for the pool to work as intended.

But the pool is not a “silver bullet” and must sit alongside other measures that reduce risk and reduce the tax burden on insurance.

Significant investment in private and public mitigation and resilience initiatives must be made to achieve sustainable and affordable insurance premiums into the future.

Retrofitting homes to make them more resilient, as well as more public infrastructure such as flood levees are practical initiatives that work.

Future proofing northern Australia to prepare for growing impacts of climate change is also necessary, for example stronger building standards, and more responsible planning and development along our coastline.

View our submission here.