New ARPC report puts strata cyclone cover under the microscope

That detail matters because the Cyclone Reinsurance Pool was created to reduce reinsurance cost pressure for eligible home, strata and small business policies exposed to cyclone and related flood risk. For strata committees, the pool is not a policy they buy directly. It sits behind participating insurers and can influence the economics of cover, but the premium paid by an owners corporation or body corporate still depends on underwriting decisions, claims history, building condition, location, excesses, taxes and the adequacy of sums insured.

ARPC has listed several possible explanations for the reduction in reinsured strata properties. These include strata risks being placed with insurers outside the pool, some eligible properties being insured individually under home policies where state rules permit it, policy consolidation, delayed reporting and purchasing changes driven by affordability pressure. Importantly, ARPC has not settled on one cause, so the number should be read as an early warning signal rather than proof of a single market trend.

The report also highlights a practical gap in resilience incentives. Mitigation discounts now apply across home, strata and small to medium enterprise properties, but take-up for strata and SME risks remains low. For strata schemes, that suggests the challenge is not simply whether discounts exist, but whether buildings can document eligible mitigation works in a way insurers can recognise. Roof upgrades, window protection, roller door bracing and other resilience measures may be relevant in some buildings, but each scheme’s position will depend on its construction, location and insurer requirements.

There is also a timing issue. ARPC is consulting on draft Version 5 premium rates, proposed to apply from 1 July 2027, with submissions due by 6 November 2026. The draft changes would modestly lift the total annual pool premium collected from insurers while rebalancing rates across risk levels. ARPC has stressed that pool premiums are only one component of customer premiums, so strata committees should not assume a direct or uniform change at renewal.

For owners corporations and bodies corporate, the immediate takeaway is governance rather than prediction. Before the next renewal, committees may wish to check whether their insurer participates in the pool, what cyclone and flood-related cover is actually included, whether declared mitigation works have been reported, and whether replacement values remain current. In a market where affordability, data quality and resilience are increasingly connected, better renewal preparation can be just as important as the headline movement in any one premium.