Still no appetite for terrorism risk
Australian Reinsurance Pool Corporation (ARPC) CEO Neil Weeks says the statutory terrorism reinsurance scheme will be required to operate for at least another three years.
He told insuranceNEWS.com.au there is “still insufficient capacity in the market to replace the scheme”.
The corporation also has the Federal Government’s blessing to set up a retrocession program that would allow it to take out reinsurance itself.
The ARPC is a statutory corporation established under the Terrorism Insurance Act to offer reinsurance for terrorism risk in Australia. Private insurers fled the market after the US terrorist attacks of 2001.
In its annual report released last week, it said it has experienced a 6% increase in gross written premium of $100.6 million, while investment income soared $10.7 million to $29.5 million.
The pool holds a total of $456.7 million in reserves, up 38% from last year. The Terrorism Insurance Act Review of 2006 gave the ARPC discretion to determine the allocation of funds above $300 million.
Mr Weeks says the corporation has the discretion to decide whether to build the pool further, purchase reinsurance for the scheme or undertake a combination of the two.
It is currently investigating a retrocession program.
“That would allow us to take out reinsurance ourselves with reinsurers and retain all the risk,” he said. “That could encourage the market back into Australia for terrorism insurance and remove the Government’s risk of having to use their indemnity.”
He expects to confirm this development by early next year.
He told insuranceNEWS.com.au there is “still insufficient capacity in the market to replace the scheme”.
The corporation also has the Federal Government’s blessing to set up a retrocession program that would allow it to take out reinsurance itself.
The ARPC is a statutory corporation established under the Terrorism Insurance Act to offer reinsurance for terrorism risk in Australia. Private insurers fled the market after the US terrorist attacks of 2001.
In its annual report released last week, it said it has experienced a 6% increase in gross written premium of $100.6 million, while investment income soared $10.7 million to $29.5 million.
The pool holds a total of $456.7 million in reserves, up 38% from last year. The Terrorism Insurance Act Review of 2006 gave the ARPC discretion to determine the allocation of funds above $300 million.
Mr Weeks says the corporation has the discretion to decide whether to build the pool further, purchase reinsurance for the scheme or undertake a combination of the two.
It is currently investigating a retrocession program.
“That would allow us to take out reinsurance ourselves with reinsurers and retain all the risk,” he said. “That could encourage the market back into Australia for terrorism insurance and remove the Government’s risk of having to use their indemnity.”
He expects to confirm this development by early next year.