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Changes to Terrorism Insurance Act

Friday, 07th July 2017

Changes to Terrorism Insurance Act. What does it mean for you?

From 1 July 2017, a greater number and wider class of buildings will fall within the Australian Reinsurance Pool Corporation (ARPC) scheme definition of what constitutes a commercial and/or large scheme residential building and will therefore be subject to an ARPC terrorism premium.

From 1 July 2017, a mandatory terrorism premium and cover applies in the following circumstances:

  • The building has a commercial floor space of 20% or greater; or
  • The building (regardless of whether it’s used as a commercial or residential strata) has a building sum insured of $50M or greater.

These changes apply to all CHU renewals and new business policies incepting from 1 July 2017.

Some implications of the changes for Bodies Corporate
  1. There will now be a greater number of buildings which will have terrorism cover and attract a terrorism premium;
  2. All buildings (including residential) with a building sum insured of $50M or greater will now have cover under the ARPC scheme;
  3. All buildings with a commercial floor space of 20% or greater will now have terrorism premium and cover (this was previously 50% for CHU policies);
  4. Bodies corporate of large buildings or those with commercial floor space of 20% or greater will see a rise in premium due to the ARPC premium. In the process of setting their 2017/2018 budgets, we recommend that such Bodies Corporate factor in the increase in order to reduce the risk of having a premium shock when a policy renewal is received.

In order to facilitate transparency and full disclosure of the terrorism premium, from 1 July 2017, CHU will clearly show any terrorism premiums on your Insurance Schedule.

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