The Australian Reinsurance Pool Corporation (ARPC) has finalised its terrorism retrocession program for this year, in line with arrangements under a previously negotiated multi-year agreement.

The program provides $3.5 billion cover, with a deductible of $225 million, with ARPC net assets and a $10 billion Federal Government guarantee providing $14 billion in total terrorism pool capacity.

“ARPC was able to lock in cost effective reinsurance rates through a multi-year agreement negotiated in 2022,” ARPC CEO Christopher Wallace said. “This provides value-for-money cover at a time when catastrophe reinsurance rates are rising on global markets.”

Chief Underwriting Officer Michael Pennell met with more than 50 reinsurers in person or online in key global markets to arrange the 2023 program.

The $3.5 billion program and ARPC net assets comprise the first levels of funding for claims in response to a declared terrorism incident.

The multi-year contract for all layers of the program started from January 1 last year and can be extended to December 31 2024 at ARPC discretion.

ARPC elected to continue with the terms that were in place last year and will continue to discuss and meet with its panel of reinsurers this year to see if it can achieve future renewal terms that are considered to be value for money, a spokesman said.

Dr Wallace says the program includes Australian and international reinsurer participants, which together provide cover for Australian-based property assets.

“ARPC’s terrorism pool boosts private market participation, supports national resilience and reduces potential losses arising from a catastrophic terrorism incident,” Dr Wallace said.

The ARPC was established in 2003 in response to a gap in the commercial property terrorism market after the September 11 2001 attacks in the US.

The terrorism pool provides cover for commercial and industrial buildings, mixed-use buildings with a floor space of at least 20% commercial, and high-value buildings with a sum insured of at least $50 million. Pricing is based on population density and is split into tiers for city, suburban and regional areas.