The cyclone reinsurance pool is delivering measurable reductions in insurance premiums in high-risk areas but affordability and availability challenges remain across northern Australia, a parliamentary inquiry has been told.

The Australian Reinsurance Pool Corporation told the Joint Standing Committee on Northern Australia that average home premiums in medium and high cyclone risk areas were between 17% and 37% lower in January this year than in October 2022, before insurers began entering the scheme.

Its May assessment also found home insurance quote success rates increased by about 25%-27% on pre-pool levels, indicating improved availability of cover.

The Insurance Council of Australia also pointed to premium reductions, citing the Australian Competition and Consumer Commission’s final monitoring report.

It told the inquiry home and contents premiums have fallen about 14% over two years in medium- and high-risk areas; strata premiums fell about 4% and small business premiums about 31%.

However, the ARPC warned lower average premiums do not mean all households are insured or have adequate cover.

Its research estimates home building insurance take-up at 91% across cyclone-exposed regions, compared with just 62% for contents cover. In areas exposed to the highest risks, the figures fall to 86% and 51%.

Participation is generally lower in communities with fewer economic resources and in more remote areas – particularly for contents insurance.

ICA stressed the pool does not reduce underlying physical risks and should form part of a broader resilience framework.

It wants stronger building standards, household resilience grants, cyclone retrofitting programs, risk-based land use planning and better national hazard information.

ICA also repeated its call for a $30.15 billion flood defence fund involving the Commonwealth and state governments.