The Cyclone Reinsurance Pool explained – what’s changed and why

• The government has established a Cyclone Reinsurance Pool to provide reinsurance to insurers
• It’s designed to improve accessibility and affordability of insurance to people in cyclone-prone areas
• QBE successfully transferred all cyclone risk policies to the Cyclone Reinsurance Pool at the end of 2023 

The reinsurance premium we pay to the ARPC will be factored into the calculation of a customer’s insurance premium.

What’s the Cyclone Reinsurance Pool?

The Cyclone Reinsurance Pool offers reinsurance to insurers to transfer their risk for cyclones and cyclone-related flood damage including wind, rain, rainwater run-off, storm surge and riverine flood.

The Pool is administered by the Australian Reinsurance Pool Corporation (ARPC), backed by an annual $10 billion federal government guarantee.¹

It’s designed to improve accessibility and affordability for householders and small businesses in cyclone-prone areas such as Northern Australia.

What is reinsurance?

Reinsurance is where one party, the reinsurer, in consideration of premium paid, agrees to indemnify another party, the reinsured, for part or all of the liability assumed by the reinsured under a policy (or policies) of insurance.

So, for QBE policies, reinsurance is where the ARPC indemnifies QBE, for liability under a policy of insurance.

When did QBE join the Cyclone Reinsurance Pool?

QBE joined the Cyclone Reinsurance Pool on 21 June 2023 and progressively transferred policies into the Pool throughout 2023.

QBE has now successfully transferred all cyclone-risk polices to the Cyclone Reinsurance Pool.

What’s changed under the Cyclone Reinsurance Pool?

The Pool covers cyclone and cyclone-related flood damage for the duration of a declared cyclone until 48 hours after the end of a declared cyclone.

QBE insurance products and claims processes haven’t changed. The only change was to our reinsurance arrangements for cyclone risk.

Have customer premiums changed?

While the aim of the Cyclone Reinsurance Pool is to reduce insurance premiums for cyclone-exposed customers by lowering reinsurance costs, savings may be impacted by inflation and other natural disasters.

Over time, the ARPC intends to maintain incentives for risk reduction, and offer discounts for people who have mitigation measures in place for their properties.²

We use many factors to set your premium. We look at things like the chance of you making a claim under your policy, the cover options you’ve chosen, the overall cost of claims we expect to pay, and our expenses of doing business, as well as other commercial factors. The reinsurance premium we pay to the ARPC is factored into the calculation of a customer’s insurance premium.

Learn more about The Cyclone Pool on the ARPC website.

¹ ACCC Insurance Monitoring report, page 11
² The Cyclone Pool – ARPC