Independent assessment of State insurance arrangements

Overview

Past project: PricewaterhouseCoopers (PwC) was engaged to assess Victoria’s property insurance arrangements in the event of an eligible natural disaster.


In the event of an eligible natural disaster the Commonwealth Government provides financial assistance to the states and territories through the Natural Disaster Relief and Recovery Arrangements (NDRRA).

Commonwealth assistance is usually partial reimbursement of actual state expenditure to alleviate damage or distress resulting from a disaster. 

Following natural disasters on the mainland in early 2011, the Commonwealth amended the NDRRA determination to require states and territories to have their property insurance arrangements independently assessed. 

PricewaterhouseCoopers (PwC) was engaged to undertake the assessment of Victoria’s arrangements, consistent with the Commonwealth’s requirements specified in the Guide to Submission Requirements

Findings

PwC found Victoria’s insurance arrangements to be adequate.

In particular the assessment notes that the Victorian Managed Insurance Authority (VMIA) has reinsurance to manage its risks (policy limit of $2.05b and is provided for losses above $50m per event or risk) as well as an aggregate stop loss cover to protect Victoria in the event of a series of smaller losses.

The report also found that the VMIA’s process for reviewing its reinsurance arrangements is comprehensive and that Victoria has an appropriately diverse spread of reinsurers with high credit quality.