Shayne Neumann (Blair, Australian Labor Party) Share this | Hansard source

On behalf of the Joint Select Committee on Northern Australia, I present the committee's report, incorporating a dissenting report, entitled Inquiry into the cyclone reinsurance pool: first report on the cyclone reinsurance pool.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—This is the first report of the Joint Select Committee on Northern Australia this term. It's the first report into the cyclone reinsurance pool this term. The cyclone reinsurance pool, CRP, has had a long history, and there have been many parliamentary and governmental inquiries and reports going back more than a decade. Indeed, I've been part of one or two myself.

This committee itself, and others, has focused on the issue of the limited market provision and the high cost of insurance in northern Australia. This report documents that history. This report focuses specifically on the implementation and operation of the CRP and its effectiveness. The report discusses the fundamental question: how can we expand or develop northern Australia without insurance coverage? Without coverage, it's very difficult to see northern Australia flourish. Tropical cyclones, storm surges, freshwater flooding, significant landfalls and soil movement are all, sadly, experienced by our fellow Australians north of the Tropic of Capricorn.

The CRP commenced operation on 1 July 2022, backed by a $10 billion Australian government guarantee intended to cover any shortfalls from the pool. That pool relates to cyclone and related flood damage arising during a cyclone event that lasts from the time the cyclone begins until 48 hours after the cyclone ends, above policyholder excesses. The main object of the CRP is to lower insurance premiums for householders and small businesses by allowing insurers to reinsure for cyclone risk at a lower cost than would be the case if those insurers purchased reinsurance from the private market. The ACCC has noted in its first report following the introduction of the CRP the disparity in insurance costs between those in the north and those in the rest of Australia. At this stage there are only a few insurers who have signed up to the CRP, like Allianz Australia. Evidence at the inquiry was that other insurers intended to join the CRP shortly.

The committee, in the report, expressed its concern about the implementation and operation of the CRP, and intends to monitor its continuing operation once again, once the CRP is fully operational. There will be further opportunity to determine whether the pool is working properly through a scheduled review of the legislation, due to report after 1 July 2025 and every five years thereafter. However, this committee intends to reconsider the CRP in 2024 once major insurers have joined the scheme.

I commend the first report of this select committee and its recommendations to the House.

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