The Australian Reinsurance Pool Corporation (ARPC) has finalised the 2023 retrocession program for the country’s terrorism reinsurance pool.
The 2023 terrorism retrocession program has the same terms and conditions as the 2022 program. The retrocession of around $3.5 billion, in addition to ARPC’s net assets and the $10 billion Commonwealth guarantee, provides over $14 billion in pool capacity in response to a declared terrorist incident affecting commercial and other eligible property assets.
“ARPC was able to lock in cost-effective reinsurance rates through a multi-year agreement negotiated in 2022. This provides value for money cover when catastrophe reinsurance rates are rising on global markets,” ARPC CEO Dr. Christopher Wallace said. “ARPC’s retrocession program includes Australian and international reinsurer participants, which, together, provide terrorism cover for Australian-based property assets.”
ARPC chief underwriting officer Michael Pennell PSM met with more than 50 reinsurers in person or online in key global markets to arrange the 2023 program.
“ARPC’s terrorism pool boosts private market participation, supports national resilience, and reduces potential losses arising from a catastrophic terrorism incident,” Dr. Wallace said.
ARPC’s net assets, which fund the $225 million program deductible, and the approximately $3.5 billion retrocession program are composed of the first levels of funding for claims in response to a declared terrorist incident.
Australia’s terrorism reinsurance pool provides insurer customers with reinsurance for commercial property and associated business interruption (BI) losses arising from a declared terrorist incident.
Through the pool, insurance companies can reinsure the risk of claims for eligible terrorism losses by electing to purchase terrorism reinsurance from ARPC. Consequently, holders of eligible insurance contracts will be covered in the event of a declared terrorist incident, with insurers required to meet these claims according to the other terms and conditions of individual policies.
