The bill will establish a reinsurance pool for cyclone and cyclone-related flood for small business insurance policies, as well as weak privately-owned homes and strata corporations.
The ICA will continue to engage with government over the next two weeks as it consults with industry on the draft bill.
It comes after the ACCC’s 2020 northern Australia insurance inquiry supported insurers’ pricing practices and found that the biggest factor in premiums in northern Australia was the higher risk of “natural perils” such as cyclones.
In that inquiry, insurers in northern Australia lost $208 million in 2018 and 2019 and between that year and 2007, aggregate losses totalled $856 million.
ICA chief executive Andrew Hall said the legislation is an “important next step” for a complex issue.
“We recognise that it is one part of the solution to improving affordability and availability of insurance for those living with the threat of cyclones in northern Australia,” Mr Hall said.
“Insurers have worked hard for many years in northern Australia to keep premiums affordable and coverage available.
“To create a long-term and sustainable market for insurance, more must be done at all levels to lower the physical risks by improving resilience standards in building codes, reform of unfair state insurance stamp duties and levies, and making better land planning decisions into the future that factor in the climate impacts.”
