Posted on: July 23, 2025
The Cyclone Reinsurance Pool Is Being Tested
Cyclone season poses a familiar challenge for Australian farmers, but recently, the financial fallout from each storm has begun to rival the physical destruction. The 2022 Queensland floods alone caused an estimated $7.7 billion in damage.
The Cyclone Reinsurance Pool was introduced to help ease the pressure of rising insurance costs and bring greater stability to cover in cyclone-prone regions. Roughly one fifth of Australia’s land mass is cyclone-prone, mostly in the northern parts of Western Australia, the Northern Territory, and Queensland.
With cyclones becoming more severe and insurance claims mounting, many are now asking: Is the Cyclone Reinsurance Pool delivering on its promise?
What the Cyclone Reinsurance Pool Covers
The Cyclone Reinsurance Pool is a government-backed scheme run by the Australian Reinsurance Pool Corporation (ARPC). It aims to make insurance more accessible and affordable in cyclone-prone areas, especially across northern Australia.
Since its launch in 2022, the pool has extended coverage to assets valued at more than $2.6 trillion.
The pool provides protection against three main risks:
- Wind damage from cyclones
- Storm surges caused by elevated sea levels
- Flooding that takes place during a cyclone or up to 48 hours after it passes
Insurers must take part in the pool if they offer property cover in cyclone-prone areas. This means eligible policyholders across these regions are guaranteed access. Check with us as your broker or adviser to confirm your insurer’s participation and whether your specific location qualifies for the pool’s support.
For banana growers, cattle stations, and irrigated farms in northern Queensland, the NT, and WA, the pool is particularly relevant due to the high cyclone exposure in these regions.
Has It Made Premiums More Affordable?
According to Deloitte, while the pool has slowed premium increases in some high-risk areas, many farmers still face affordability challenges, especially where properties are older or more vulnerable. Premiums are still largely shaped by key factors like rebuild costs, location, and how vulnerable the property is to cyclone damage. If your property is older, more exposed, or underinsured, reinsurance alone won’t lead to big savings. The pool works behind the scenes to support insurers, not replace your existing cover. Some insurers must now disclose how the pool affects premium pricing, giving policyholders more transparency.
Why Cyclone Cover Isn’t Just About Buildings
Cyclones cause more than just damage to buildings. They can disrupt harvests, water access, livestock movement, supply chains, and power. Each of those has serious flow-on effects for farm operations. Deloitte stresses the need for catastrophe planning that tackles these wider risks, not just property loss.
A comprehensive insurance approach for farms should include:
- Reinsurance mechanisms, such as the cyclone pool, to support insurers
- Well-structured policies with clear definitions for cyclone and flood coverage
- Investments in resilience, like cyclone-resistant infrastructure and elevated storage
- Business continuity plans to help restore operations swiftly after an event
Keeping detailed records and acting quickly after a cyclone can help streamline the claims process and support faster recovery.
Think of your insurance as a multi-layered defence, shaped to suit the unique risks your farm faces. It’s also worth knowing what government disaster recovery programs are available, as they can offer extra support after a major cyclone. Government disaster grants and assistance may be available after severe events, so ask us for guidance on how to access these if needed.
Questions to Ask Before the Next Cyclone Hits
With cyclone risks rising, it’s crucial to understand exactly what your insurance covers.
Consider asking your broker or adviser:
- How is flood vs cyclone damage treated in my policy?
- Can I reduce my risk profile by improving my infrastructure (e.g. roof tie-downs, raised storage, water retention)?
- Will having a business continuity plan in place strengthen my policy or make the claims process easier?
- Are there any exclusions or waiting periods for cyclone or flood claims that I should be aware of?
- What steps should I take before, during, and after a cyclone to support my claim and reduce potential losses?
Asking these questions helps you make informed decisions, strengthen your resilience, and ensure your farm is ready for the next major storm.
Looking Ahead
A broker or adviser can walk you through how the Cyclone Reinsurance Pool affects your policy, flag any gaps, and suggest changes to get you cyclone-ready. Make sure your insurance not only meets requirements but also builds real resilience into your farm operations.
The Cyclone Reinsurance Pool isn’t a silver bullet, but it’s a valuable safety net. Now is the right time to review your cover, clarify what’s protected, and prepare.
