Federal government announces reinsurance pool to cover cyclone damage in Northern Australia

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The pool will cover cyclone and related flood damage (file photo). (ABC News: Samille Mitchell)

A reinsurance pool to cover cyclone and related flood damage in Northern Australia will come into effect from July next year, the federal government has announced.

The pool is backed by a $10 billion government guarantee and is aimed at reducing insurance premiums by over $1.5 billion for households, strata and small businesses over 10 years.

The program will be available for Australians living north of the Tropic of Capricorn.

In excess of 500,000 property insurance policies are expected to be eligible to receive cover.

“Homeowners and businesses have been faced with crippling insurance costs, and in some cases, can’t get insurance at all,” Prime Minister Scott Morrison said.

“It’s not ok, and we’re going to change that.”

Federal Treasurer Josh Frydenberg said a taskforce led by the treasury would work with the insurance industry closely and deliver the final design of the reinsurance pool.

“More affordable insurance means peace-of-mind for hundreds of thousands of Australians across Northern Australia, knowing that their economic livelihoods are protected,” he said.

The federal government has also pledged $40 million for the North Queensland Strata Title Resilience Pilot Program, aimed specifically at reducing insurance cost for strata properties, also known as body corporate insurance.

Federal Housing Minister Michael Sukkar said the three-year pilot program would subsidise the cost of cyclone risk mitigation.

Source: Thanks msn.com