Oncoming storm

CHU and Flex Insurance join the ARPC Cyclone Pool

CHU and FLEX have announced that their strata and build to rent portfolios will be entering the ARPC Cyclone Reinsurance Pool in July 2023. This measure will assist property owners with affordability and access to suitable insurance products.

CHU’s residential and commercial strata portfolios, FLEX’s strata portfolio and CHU’s Build to Rent portfolio will join the pool on the 29th July 2023. This means for eligible new business and renewals with an effective date of 29 July 2023 will participate in the pool. CHU’s remaining portfolios of Community Association, Lot Owner Homes, Contents and Landlords for strata will join the Pool towards the end of 2023.

CHU and FLEX have provided the following Frequently Asked Questions to provide further information.

Frequently Asked Questions

What is the Australian Reinsurance Pool Corporation?
The Australian Reinsurance Pool Corporation (ARPC) is responsible for administering the Pool. It is mandatory for general insurers with eligible policies to participate.

Why has the Cyclone Reinsurance Pool been introduced?
People who live in areas where there are cyclones and floods have to pay more for insurance. This makes it harder for them to afford insurance and some of them don’t have enough insurance to cover the damage if a cyclone or flood happens.
The pool is intended to improve accessibility and affordability of insurance for households and small businesses in cyclone-prone areas across Australia.
The pool operates Australia-wide but targets support to cyclone-prone areas, which are primarily located in northern Australia

What strata properties are covered by the Pool?
Residential strata schemes (including mixed use schemes where 50% or more floorspace is used for residential purposes).
Commercial strata schemes where the combined building sum insured and common area contents value does not exceed $5M.

What does the Pool cover?
The Pool covers named cyclones and any cyclone related flood damage, including wind, rain, rainwater, rainwater run-off, storm surge (if the existing policy provides this cover) and riverine flood caused by a cyclone.
Note that for both CHU and FLEX strata policies, storm surge (and/or action by the sea, high tides, etc) are policy exclusions under the building section.
Claims are admissible from the time the cyclone begins until 48 hours after the cyclone ends.

What will the Pool mean for my insurance premium?
Currently, insurers will price their risks against all weather-related perils, such as bushfire, windstorm, cyclone, earthquake, flood etc.
To implement the Pool, the APRC will provide a set of pricing relativities for insurers to use for cyclone and cyclone related flood.
Insurers still need to ensure adequate pricing for all other natural perils and any premium tendered is dependent on a number of additional factors including claims history, reinsurance costs and more. Inflationary pressures and the continued escalation in the cost of building materials, etc has been well publicised and continues to impact overall premiums.

Will CHU and Flex’s underwriting guidelines change now as to where they can write strata business?
At this stage CHU and Flex’s underwriting guidelines remain unchanged. We will monitor the impact of the Cyclone Pool and review our underwriting guidelines accordingly in future

I don’t know how to make a claim in the event of a cyclone?
If your policy is eligible for the Pool, your cover with CHU or Flex remains as per the policy wording in place.
In the event of a cyclone that leads to a claim, insureds can lodge their claim through CHU or Flex as they would with any other admissible claim. CHU and Flex then seeks recovery directly from the ARPC reinsurance pool.

My renewal doesn’t show how admission into the Pool has impacted my premium?
It is not a requirement on insurers to show the impact of the Pool.
This is likely due to factors referenced in the previous section “What will the Pool mean for my insurance premium?”. There are many factors that influence the overall premium tendered for any particular property risk.


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Important Notice

In addition to the covers summarised above, there are a number of terms, conditions, limits and exclusions contained in the Policy that can affect how or whether a claim is paid under this Policy. You need to read the Schedule and the Policy Wording for full details of the available cover, terms, definitions, conditions, exclusions and limits that apply to make sure it meets Your expectations.

Disclaimer: CHU Underwriting Agencies Pty Ltd (ABN 18 001 580 070, AFS Licence No: 243261) acts under a binding authority as agent of the insurer QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFS Licence No: 239545). Terms, conditions, limits, deductibles and exclusions apply to the products referred to above. Any advice in this article is general advice only and has been prepared without taking into account your objectives, financial situation or needs. Before making a decision to acquire any product(s) or to continue to hold any product, we recommend that you consider whether it is appropriate for your circumstances and read the relevant Product Disclosure Statement (‘PDS’), Financial Services Guide (‘FSG’) and the Target Market Determination (‘TMD’) which can be obtained by contacting CRM Brokers or downloading it from www.chu.com.au.

Information is current as at the date the article is written as specified within it but is subject to change. CRM Brokers make no representation as to the accuracy or completeness of the information. Various third parties have contributed to the production of this content. All information is subject to copyright and may not be reproduced without the prior written consent of CRM Brokers.