Amendments expected to extend Australia’s Terrorism Insurance Scheme coverage, recommended by the 2015 Triennial Review by Treasury, have been approved with effect from 1st July.
The changes broaden the definition of eligible property by including buildings where at least 20% of floor space is used for commercial purposes or that are insured by at least $50 million – whether used for commercial or other purposes.
The Australia’s Terrorism Insurance Act 2003 will also extend the definition of a terrorism exclusion or exception in an insurance contract to include acts described as “chemical”, “biological”, “polluting”, “contaminating”, “pathogenic”, “poisoning”, or words of similar effect.
ARPC Chief Underwriting Officer, Michael Pennell PSM, said the clarifications will benefit insurers and policyholders by extending coverage to fill the mixed use/high value building gap and remove uncertainty in the event of a Declared Terrorist Incident involving biological or chemical material.
“ARPC would like to thank insurers that attended our 2016 market consultation events and provided valuable feedback with regard to the recommendations,” said Mr Pennell.
“These changes will modernise Scheme coverage, underpin its financial strength, and ensure ARPC is better equipped to protect Australia from the economic losses caused by terrorism catastrophe.”
The amendments come as terror risk is increasingly being recognised as a growing threat; Aon’s latest Risks Maps report noted a 14% increase in global terror attacks last year compared with 2015, with this figure having risen by 174% in Western countries.
The re/insurance broker highlighted that the convergence of populism and terrorism have compounded global geopolitical risks with both elements feeding into and propagating the other.
