Treasury Laws Amendment (Cyclone and Flood Damage Reinsurance Pool) 2022

# Treasury Laws Amendment (Cyclone and Flood Damage Reinsurance Pool) Bill 2022 ## What it does The government is creating a new insurance safety net specifically for cyclone and flood damage, similar to an existing scheme for terrorism-related losses. Insurance companies will be required to buy backup coverage (called reinsurance) through a government-backed pool called the Australian Reinsurance Pool Corporation when they take on cyclone and flood risks. ## Why it matters Cyclones and floods cause billions in damage across Australia, and insurance companies have been reluctant to cover these risks or have charged very high premiums. This scheme aims to make cyclone and flood insurance more available and affordable for households and businesses in vulnerable areas by having the government share the financial burden of catastrophic events. ## Key details - **Who's affected**: Most general insurance companies operating in Australia must participate, including overseas insurers and Lloyd's of London syndicates that want to offer cyclone/flood coverage - **Penalty for non-compliance**: Insurance companies that fail to reinsure their cyclone risks through the pool face civil penalties of up to 1,000 penalty units (currently worth around $180,000) per year - **When it starts**: The law takes effect on the day it receives Royal Assent (royal approval), with no delayed start date

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