Australia's terrorism insurance scheme administrator, Australian Reinsurance Pool Corporation (ARPC), has confirmed its retrocession reinsurance programme for the 2018 calendar year. The new A$3.065 billion (US$2.39 billion) retrocession reinsurance programme plus ARPC's net assets and the A$10 billion Commonwealth guarantee, provides continuing scheme capacity to pay claims of more than A$13.4 billion.
“ARPC was able to increase private sector participation in the scheme by lowering the retrocession deductible from A$350 million to A$285 million and renewing the remainder of the programme within our budget. ARPC remains well positioned to protect Australian businesses from economic losses, including property damage and business interruption, in the event of a Declared Terrorist Incident,” said Dr Chris Wallace, ARPC Chief Executive.
“Our private sector retrocession reinsurance programme provides increased scheme capacity to pay for large terrorism events, and protects the government’s Commonwealth guarantee and Australian taxpayers,” Dr Wallace said.
ARPC also completed more than two thirds of the programme on a multi-year basis, providing a degree of stability for all stakeholders in terms of the level of cover purchased and price paid.
The A$3.065 billion retrocession reinsurance programme covers approximately A$3.5 trillion in Australian-based commercial property sector assets by insured value, up from A$3.4 trillion in 2017.
Dr Wallace and Chief Underwriting Officer, Michael Pennell, met almost 70 reinsurers in key global markets to negotiate the 2018 programme.
ARPC is a corporate Commonwealth entity established under the Terrorism Insurance Act 2003. Following the terrorist events in the United States on 11 September 2001, there was a global withdrawal of terrorism insurance. The government was concerned that the lack of comprehensive insurance cover for commercial property or infrastructure would lead to a reduction in financing and investment in the Australian property sector. The role of ARPC is to establish and provide ongoing administration of a scheme that would provide insurance cover for eligible terrorism losses, involving commercial property, associated business interruption losses and public liability.