Terrorism Insurance Act 2003

Terrorism cover was withdrawn from many insurance policies in Australia the wake of the tragedy of September 11, 2001.

On 1 July 2003 the Australian Commonwealth Government introduced the Terrorism Insurance Act 2003. This requires Insurers to provide cover for terrorist events in eligible commercial property, business interruption and public liability policies.

The Act also established a reinsurer, the Australian Reinsurance Pool Corporation (APRC), which provides reinsurance cover to insurers for a declared terrorist event. The APRC has a premium pool of $10.3billion funded by a cash pool of $300 million collected from premiums, a commercial line of credit of $1 billion and a Government indemnity of $9 billion.

Between 1 July 2003 and 30 September 2003 the APRC reinsured insurers for a declared terrorist incident free i.e. without charging a reinsurance premium. Fortunately a terrorist event was not experienced.

From 1 October 2003 APRC commenced charging reinsurance premiums on eligible contracts. These premium charges are expected to be passed on to the Policyholder.

A ‘terrorist act’ is deemed to have occurred if it is declared by the Treasurer after consultation with the Attorney General. The Treasurer cannot declare an act to be a terrorist incident if he is satisfied it is an act of war.

Let’s hope the pool of funds collected by the APRC never has to be used.

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Author

Published with permission of Claim Solutions Pty Ltd.

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Insurance Policy

Country: - Australia

Policy Description: - Various

Insurer: - Various

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External Links

 

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