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Australia’s Cyclone Reinsurance Pool Under Review: What It Means for Insurance, Affordability, and Resilience

Cyclone Reinsurance Pool Inquiry 2025: Impact on Insurance Costs and Future Reforms

As extreme weather events like cyclones become more frequent and intense due to climate change, the cost of insuring homes and businesses in cyclone-prone regions of Australia—particularly Northern Australia—has skyrocketed. In response, the federal government launched the Cyclone Reinsurance Pool in 2022, backed by a $10 billion guarantee to ease pressure on premiums and make insurance more accessible.

Now, in March 2025, the Joint Select Committee on Northern Australia has released its long-awaited final report on the pool’s implementation and operation. While the committee acknowledges that the pool is beginning to deliver positive, albeit limited, outcomes, it stops short of recommending sweeping changes. Instead, it offers a framework for refinement and long-term sustainability, leaving key questions for a forthcoming review.

At Business Insurance Consulting, this marks a critical juncture for homeowners and small business owners in cyclone-prone areas—and a moment for the broader industry to take note.

What Is the Cyclone Reinsurance Pool?

Established in July 2022, the Cyclone Reinsurance Pool was introduced by the former Morrison government to address spiralling insurance premiums in Northern Australia, where cyclone and flood risks are significantly higher.

The pool, managed by the Australian Reinsurance Pool Corporation (ARPC), provides coverage for:

  • Cyclone damage and cyclone-related flooding for home, strata, and eligible small business policies.
  • Events occur during a cyclone and up to 48 hours after it ends.

This government-backed scheme is designed to de-risk insurers, allowing them to lower premiums for customers in high-risk regions by transferring the cost of extreme weather reinsurance to the pool.

Key Findings and Recommendations from the 2025 Final Report

The parliamentary inquiry into the pool, which included testimony from insurers, consumer advocates, and regulators, resulted in eight recommendations. While the report doesn’t take a firm stance on some of the pool’s more debated design elements, such as expanding flood coverage or extending the 48-hour event window, it emphasises the pool’s early signs of success and the need for continued government support.

Here are the highlights:

  • Continued Government Support: The committee urges the federal government to maintain and strengthen the pool, citing the urgent need to correct “market failure” in cyclone-exposed regions.
  • National Resilience Program: A “strong recommendation” that the government implement a permanent, ongoing national resilience initiative focused on long-term disaster mitigation.
  • Incentives for Home Hardening: Tax offsets and subsidies should be considered for homeowners to make their properties more cyclone-resistant.
  • Inclusion of Marine Cover: The committee has requested the release of modelling data exploring the benefits of including marine insurance in the pool.
  • Review of Taxation Methods: The ACCC is encouraged to investigate how current taxation affects insurance affordability, suggesting that state tax reform may be part of the solution.

These recommendations reflect a bigger-picture approach, tying the reinsurance pool into a broader strategy focused on climate adaptation, risk mitigation, and affordability.

The Insurance Council of Australia’s Response

The Insurance Council of Australia (ICA) welcomed the report, highlighting its alignment with its long-standing push for comprehensive affordability reforms.

“While we support the cyclone reinsurance pool’s intent to improve affordability and availability for cyclone-prone communities, we continue to advocate for targeted risk reduction as the most effective long-term solution to ease pressure on insurance costs.”

ICA’s statement underscores that insurance affordability cannot be solved through reinsurance alone—a combination of mitigation, reform, and resilience is essential.

What This Means for Homeowners and Businesses

This report is encouraging but not conclusive for residents and businesses in cyclone-affected regions—especially those in Northern Queensland, the Northern Territory, and parts of Western Australia. It confirms that the pool is beginning to stabilise premiums, but more needs to be done to lower insurance costs meaningfully and consistently.

Since joining the pool, Business Insurance Consulting has already seen clients in eligible areas benefit from modest premium reductions. However, many are still waiting for more noticeable savings, and questions remain about who is eligible, what types of claims are covered, and how to mitigate risk best to reduce premiums further.

A New Era of Resilience-Focused Insurance?

The most promising takeaway from the report is its strong endorsement of resilience-based policy reform. This includes ideas like:

  • Subsidising cyclone-resistant construction materials.
  • Offering incentives to homeowners for retrofitting roofs, windows, and other vulnerable parts of buildings.
  • Requiring state governments to reform land-use planning to prevent building in high-risk zones.

This signals a shift from reactive financial assistance (such as disaster recovery payments) to proactive investment in prevention, which Business Insurance Consulting strongly supports.

How Business Insurance Consulting Helps You Navigate These Changes

Whether you’re a homeowner wondering how the cyclone pool affects your current policy or a small business owner seeking comprehensive protection against extreme weather, Business Insurance Consulting is here to help.

We provide:

  • Personalised insurance reviews to check if you’re eligible for cyclone pool benefits.
  • Access to competitive insurers that participate in the pool.
  • Guidance on mitigation strategies that could lower your premiums further.
  • Support through the claims process when the worst happens.

We stay current with government reforms, industry regulations, and climate-related risks, so you don’t have to.

Looking Ahead: What’s Next?

The committee’s final report doesn’t mark the end of the road for cyclone insurance reform—it’s a stepping stone. A scheduled formal review of the pool later this year will explore its future scope, possibly addressing issues like:

  • Extending the 48-hour post-cyclone coverage window
  • Including all flood events, not just those related to cyclones
  • Broadening eligibility to more business types
  • Further premium relief options

This means now is the ideal time for residents and businesses in cyclone-prone areas to review their insurance strategies, update their coverage, and take full advantage of available government and industry programs.

Don’t Wait for the Next Storm

Cyclone Alfred reminded Australians that extreme weather is no longer rare, and insurance needs to evolve accordingly. The Cyclone Reinsurance Pool represents a critical effort to make protection more accessible, but proper security also depends on how individuals and businesses act.Partner with Business Insurance Consulting to ensure your insurance policies are aligned with today’s risks, tomorrow’s reforms, and the increasing realities of a changing climate.

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Cyclone Alfred and the Rising Storm: Why Insurance is Essential in a Changing Australia

The Growing Need for Home and Business Insurance in Australia Amid Increasing Cyclone Activity

When the Unexpected Becomes Reality: Cyclone Alfred in 2025

In March 2025, Cyclone Alfred struck South East Queensland and northern New South Wales, leaving behind a trail of destruction few saw coming. With wind speeds exceeding 100 km/h, torrential rain, widespread flooding, and over 300,000 homes and businesses without power, Alfred served as a harsh wake-up call to a region that hadn’t faced a cyclone of this magnitude in over 50 years.

The storm caused over $1.2 billion in economic damage, overwhelmed infrastructure, displaced families, and halted business operations across the coast. Most notably, it marked a turning point in public awareness—cyclones, long considered a threat mainly to northern regions, are also a real risk for southern Queenslanders.

For many, the financial burden of damage from Cyclone Alfred was worsened by insufficient or non-existent insurance coverage, particularly among property owners who assumed they lived outside the cyclone danger zone.

Learning from the Past: Australia’s History of Devastating Cyclones

Cyclone Alfred is not the first significant weather event to impact Australians—and it won’t be the last. Over the past century, Australia has experienced numerous catastrophic cyclones, including:

  • Cyclone Tracy (1974) – One of the most infamous in Australian history, Tracy devastated Darwin, destroying over 70% of homes and leaving over 40,000 people homeless.
  • Cyclone Yasi (2011) – A Category 5 storm, Yasi caused widespread damage across Queensland’s coast, with an estimated $3.5 billion in losses, particularly in agriculture and tourism.
  • Cyclone Debbie (2017) – Another Category 4 cyclone tore through North Queensland, affecting thousands of residents and businesses, with severe flooding extending into New South Wales.
  • Cyclone Marcia (2015) – Made landfall as a Category 5 near Shoalwater Bay, causing over $750 million in insured losses across central Queensland.

The common thread among these events is that those prepared with proper insurance recovered faster and more fully than those not.

Climate Change and the Cyclone Shift

South East Queensland’s cyclone-free streak ended in 2025—but that may just be the beginning. According to the Bureau of Meteorology and CSIRO, while the number of tropical cyclones forming annually may not be increasing, the intensity and unpredictability of these storms are on the rise, primarily driven by climate change. Warmer oceans and rising sea levels contribute to more robust, wetter, and slower-moving cyclones, increasing the risk of both wind damage and inland flooding.

Experts predict that as the atmosphere continues to warm, cyclone zones will extend further south, putting more communities at risk. That means areas like Brisbane, the Sunshine Coast, and the Gold Coast can no longer rely on geography alone to stay safe.

This changing climate reality makes comprehensive insurance not only advisable but essential.

Why Home Insurance is Critical in Today’s Australia

In the wake of Cyclone Alfred, many homeowners were left scrambling. Some had basic policies that didn’t cover storm surges or flooding. Others were underinsured, having not updated their policies to reflect rising construction costs or the full value of their contents.

A well-structured home insurance policy should include:

  • Storm and flood cover: Many policies exclude flood damage unless specifically added.
  • Accidental damage: Covers a broader range of incidents than named-peril policies.
  • Temporary accommodation costs: If your home is uninhabitable, your policy should cover living expenses while repairs are underway.
  • Total replacement value ensures that you’re not left out of pocket due to underestimations in building or rebuilding costs.

At Business Insurance Consulting, our team works with clients to assess their specific property risks and match them with personal insurance solutions that offer complete peace of mind—because “near enough” isn’t good enough when disaster strikes.

Business Insurance: The Backbone of Recovery

Businesses are particularly vulnerable during and after natural disasters. Storms don’t just damage buildings—they shut down operations, disrupt supply chains, and prevent staff from working, leading to lost revenue that can be difficult to recoup without insurance.

Essential business insurance options include:

  • Property Insurance: Covers physical damage to buildings, stock, and equipment.
  • Business Interruption Insurance replaces lost income and helps cover fixed costs while your business recovers.
  • Management Liability Insurance protects directors and owners from personal financial loss related to operational decisions, including compliance or employment disputes, during a crisis.
  • Cyber Insurance: Increasingly vital as digital systems are targeted during disruption.

Cyclone Alfred revealed just how critical it is for businesses in all parts of Queensland to assess their vulnerability—not just to wind and water but also to operational downtime. With the right policies, Business Insurance Consulting can help ensure your company recovers quickly, keeps staff paid, and maintains customer trust.

Partnering with Business Insurance Consulting: A Smarter Way to Insure

Insurance shouldn’t be a “set and forget” decision. Your home, business, and assets, as do the risks you face, change over time. That’s why working with Business Insurance Consulting gives you a decisive advantage.

Our team offers:

  • Personalised assessments of your insurance needs based on your location, assets, and risk profile
  • Access to Australia’s leading insurers, giving you competitive quotes and flexible options
  • Guidance during the claims process, so you’re never left navigating red tape on your own
  • Ongoing support to review and update your policies as your life and business evolve

Our goal is simple: to make insurance clear, accessible, and tailored to protect what matters most to you.

Don’t Wait for the Next Storm

If Cyclone Alfred taught us anything, the “it won’t happen to me” mindset no longer applies. Whether you’re a homeowner, landlord, or business owner in Queensland or beyond, the risks associated with extreme weather events are only increasing. Insurance isn’t just a backup plan—it’s your first defence against financial devastation.

At Business Insurance Consulting, we’re here to help you understand your risks and create an insurance plan that gives you confidence, not just coverage.

Get in touch today and make sure you’re ready, not just for the next cyclone, but for whatever comes your way.