The first year of operation for Australia's Cyclone Reinsurance Pool has seen many major property insurers join in, but few claims thanks to a relatively benign wet season in Australia's north in 2022/23.
Since the start of this year, the pool's administrator, the Australian Reinsurance Pool Corporation (ARPC), has been notified of four declared tropical cyclone events, but advised of only "a handful" of claims, mostly stemming from tropical cyclone Gabrielle, which affected Norfolk Island off mainland Australia's east coast in February, and one claim from cyclone Isla off Western Australia's coast, according to spokesperson for the pool, Alexander Drake.
One insurer InsuranceERM spoke to on the basis of anonymity said: "Low claims are certainly welcome, but minor damage to few properties isn't the 'new normal' we're expecting here."
Drake said Allianz Australia Insurance and northern Australian specialist Sure Insurance (representing Pacific International Insurance, Liberty Specialty Markets and New India Assurance Company) have been in the pool since early January. The pool started operations in July 2022. It now has 10 insurer signatories on board. Others joining during 2023 have included QBE, RAA, RAC, Suncorp's AAI and Youi.
Drake added about 65% of Australia was covered with primary insurers onboarded so far for residential properties, and the pool expects 95% coverage by the nominal 1 November start of northern Australia's wet season.
Major insurers writing over A$300m of gross premiums – including IAG and Auto & General – are required to join this year. Smaller firms writing less have until the end of 2024 to join.
The ARPC has also revealed, in its annual report, catastrophe modellers whose models it uses. It employs probabilistic models of RMS (wind and fluvial flood); Risk Frontiers (wind); Combus (wind, storm surge, fluvial flood); and deterministic models of Finity Finperils (storm surge); Aon's CHIP (storm surge, fluvial flood); and JBA (fluvial flood).
Speaking in Sydney in late May, deputy treasurer Stephen Jones expressed hope mechanisms such as ARPC would help keep insurance affordable.
Insurance regulator, the Australian Prudential Regulation Authority (Apra) voiced a similar desire separately this week about its industry-wide data-harvesting programme, whose inaugural review was announced yesterday.
Apra member Suzanne Smith promised to keep supporting insurers busy familiarising themselves with the programme whose first deadline, in October, encompasses data on about 70 reporting standards linked to AASB 17 – Australia's version of IFRS 17 – and the capital framework for health insurers.
Apra will engage with industry in mid-2024 on collecting non-financial risk data on operational and IT risks, governance, and "fit and proper" requirements.
Companies:Australian Prudential Regulation AuthorityAustralian Reinsurance Pool CorporationAllianz Australia InsuranceSure InsurancePacific International InsuranceLiberty Specialty MarketsNew India Assurance CompanyQBERAARACSuncorpAAIYouiIAGAuto & GeneralRMSRisk FrontiersCombusFinity FinperilsAonJBA