A cyclone reinsurance pool for northern Australia, backed by a $10 billion government guarantee, will be announced by Prime Minister Scott Morrison today.

The program is expected to help protect more than 500,000 properties north of the Tropic of Capricorn and will cover cyclone and associated flood damage.

Mr Morrison will announce the scheme in Cairns today.

"Homeowners and businesses have been faced with crippling insurance costs, and in some cases, can't get insurance at all," Mr Morrison was quoted as saying by the ABC website.

"It's not OK, and we're going to change that."

The ABC report says Treasury will work closely with the insurance industry to deliver the final design of the pool. It should be up and running by July next year.

The Government expects that the pool will reduce premiums by more than $1.5 billion over 10 years.

The Insurance Council of Australia declined to comment until Mr Morrison had delivered the announcement.

Most insurers have historically argued against a pool on the basis that it could distort price signals, instead lobbying governments to invest in mitigation measures.