On 21 May 2021 the Federal Government issued a consultation paper [the paper] in relation to the design of the reinsurance pool, where interested parties can make submissions relating to the design and implementation of the scheme.
The Australian Reinsurance Pool Corporation will administer the pool under the guidelines, which will be released prior to the pool becoming available by the target date of 1 July 2022.
This is only one of the Government initiatives announced recently and the interest around how the $40 million funding, pledged over three years, will work in practice.
This funding package is aimed to subsidise the cost of cyclone risk mitigation works for strata titled properties in Northern Queensland through the Northern Queensland Strata Resilience Pilot Program, due to commence in 2022.
For a full copy of the media release issued by the Prime Minister click here.
The paper discusses four objectives in the design of the pool:
- Designing a scheme that improves availability and affordability of insurance in areas of the country that are at high risk of natural peril, such as cyclones;
- Understanding the risk associated with establishment of the pool to be mitigated across the short, medium and long term. This involves a fair assessment of how the scheme will be used to achieve balanced outcomes. In the short term, the target of lowering premiums, in the medium term to improve property resilience and over the long term, encourage new construction in high risk areas compliant with cyclone and related flood damage construction codes;
- How the transition of the industry in accessing the reinsurance pool will be managed; and
- To minimise any adverse or unintended impacts from the establishment of the pool.
Industry stakeholders are being asked to respond to 23 questions on the design of the reinsurance pool to ensure the targeted objectives are achieved.
For the consultation paper click here.
This article was contributed by Nicky Lonergan, CEO Archers the Strata Professionals.