The Australian government’s terrorism reinsurance agency, Australian Reinsurance Pool Corporation (ARPC), has renewed its AU$3.315 billion (US$2.3 billion) retrocession reinsurance program for 2019.
The cover, along with ARPC’s net assets and a $10 billion Commonwealth guarantee, provides capacity in the event of a declared terrorism incident against commercial and eligible property assets exceeding $13.7 billion.
ARPC Chief Executive Christopher Wallace and Chief Underwriting Officer, Michael Pennell, met with almost 70 reinsurers from various global markets to negotiate the 2019 program.
“ARPC’s retrocession program encourages the global insurance market to participate in providing terrorism cover for Australian-based assets, which protects the Commonwealth (Australian Government) guarantee and Australian taxpayers,” commented Wallace,.
“ARPC achieved a slight reduction in pricing for the 2019 retrocession program. The price reduction, plus reinsurers’ appetite to participate, prompted ARPC to purchase an additional top layer of $250 million for 2019,” he said.
ARPC was set up in 2003 to correct a market failure caused by global reinsurers withdrawing coverage for commercial property damage in the wake of the events of September 11.
The $3.315 billion retrocession program and ARPC’s net assets are the first layers of funding for claims in the event of a terrorism incident.
“ARPC remains well positioned to be an effective provider of terrorism risk insurance that facilitates market participation, supports national resilience and reduces potential losses arising from terrorism catastrophe,” Wallace added.