Terrorism Insurance – Market Update

19 September 2018

From 2014 through 2017, terrorists and other “non-state actors” globally killed more than 122,000 people.

Past attacks were carried out primarily by specific groups against perceived high-value/high-profile targets.

Whilst the threat remains, many recent attacks have come against soft targets and been perpetrated by “lone wolves” and small groups, with no direct connection to known terrorist organisations.

Here at home, Australian National Security has developed The National Terrorism Threat Advisory System. It is a scale of five levels created to provide advice about the likelihood of an act of terrorism occurring in Australia.

At present, the threat level remains probable

As the terrorism landscape evolves, it is important that the insurance industry and government bodies adapt, to ensure our communities have protection in the event of a terrorism incident.

In consideration of the limited Terrorism Cover available in the private sector, the Government introduced the Terrorism Insurance Act 2003 (TI Act) and under it, a corporate Commonwealth entity called the Australian Reinsurance Pool Corporation (ARPC).

The TI Act is subject to a triennial review, of which the most recent (2015) included recommendations that the scope of the act be broadened.

For details visit https://www.bacbrokers.com.au/terrorism-insurance-changes/

Given the triennial nature of the legislation’s review, this year’s is currently underway.

As in previous reviews, the 2018 Review will consider the need for the Act to continue and opportunities to improve the ARPC Scheme.

This review will also cover emerging risks such as cyber terrorism and coverage available for victims of terrorism.

As a key stakeholder to the Strata Industry, BAC met with Treasury earlier this week to provide our opinion on the ongoing importance of the scheme and continued need for government intervention.

Subsequently, we have advised that as insurance markets contract, it is pivotal that protection continues. This will ensure the reinstatement and longevity of our communities into the future.

We have also called for clarity surrounding the ambiguity which exists between ‘Total Property Sum Insured’ (which normally tie to policy exclusions) and ‘Total Building Value’ (where the TI Act triggers).

BAC’s objective will always be to represent the interests of owners.

This includes negotiating policy terms/premiums & also the continued advocacy for a better, more equitable and more robust, Strata Insurance environment.