How Cyclone Risk Affects Insurance Premiums

If you live in Cairns or anywhere in Far North Queensland, you'll know that insurance premiums can be significantly higher than in other parts of Australia. The primary reason? Cyclone risk.

Why Premiums Are Higher in FNQ

Insurance premiums are calculated based on risk. North Queensland faces a combination of cyclones, severe storms, flooding, and storm surge that most other regions don't experience. Insurers factor in the likelihood and potential cost of claims when setting premiums.

After major events like Cyclone Yasi (2011) and Cyclone Larry (2006), the insurance industry reassessed its exposure in the region, leading to significant premium increases for many homeowners.

What Determines Your Premium

Several factors affect your individual premium:

Location — Properties closer to the coast or in flood-prone areas pay more

Building age and construction — Older homes built before modern cyclone codes can cost more to insure

Roof type — Metal roofs rated to cyclonic wind standards are viewed more favourably

Sum insured — Higher rebuilding costs mean higher premiums

Excess amount — Choosing a higher excess can lower your premium

Claims history — Previous claims can increase your future premiums

How to Reduce Your Premiums

There are practical steps you can take to bring your premiums down:

Upgrade your roof — Ensuring your roof meets current cyclone standards can significantly reduce premiums

Install cyclone shutters — Protecting windows and openings reduces potential damage

Increase your excess — A higher excess means lower premiums, but make sure you can afford the excess if you need to claim

Bundle policies — Some insurers offer discounts for combining home and contents, or multiple policies

Use a broker — A local broker can compare multiple insurers to find the best deal

The Role of the Cyclone Reinsurance Pool

The Australian Government's cyclone reinsurance pool, managed by the Australian Reinsurance Pool Corporation (ARPC), aims to reduce premiums for properties in cyclone-prone areas. Since July 2022, the pool has been progressively taking on cyclone risk from insurers, with the goal of making insurance more affordable in northern Australia.

Get a Better Deal

At Cairns Home Insurance, we work with multiple insurers to find competitive premiums without compromising your cover. Contact us for a free comparison and see how much you could save.