The Australian Reinsurance Pool Corporation (ARPC) should consider extending its terrorism cover beyond commercial properties, according to legal expert Ralph Bonig.

The Finlaysons Special Counsel says inclusions such as residential property and cyber terrorism could be added, to keep up with the changing face of terror.

Terrorists have shifted to “soft targets” – places where they can easily blend in and inflict large-scale civilian destruction, as seen in the recent attacks in Paris and Brussels.

“I think the time has come to broaden the scope of the focus to stay abreast of changing trends in terrorist activities,” Mr Bonig told insuranceNEWS.com.au. He says the scheme “should now look at the financial viability of looking to expand to residential covers”.

Mr Bonig spoke on the topic at last week’s Northern Territory Insurance Conference in Darwin, where he used the 2014 Lindt Cafe siege in Sydney to illustrate gaps in coverage.

“The basic theme of my presentation was to look at the evolution and history of the ARPC,” he said. “I then looked at its exposure to the aftermath of the Lindt Cafe event and some particular areas that I focused on were the difference between coverage of commercial properties and the lack of coverage for residential properties.

“I analysed a scenario in which, if the Lindt Cafe event had occurred in a suburban cafe in a residential area, what would have been the outcome?”

The Federal Government declared the siege a terrorist event, meaning insurers were obliged to submit eligible losses to the ARPC.

“Given the financial stability of the scheme… I suggested it might be time to provide broader coverage outside of just commercial premises, and I noted the recent recommendations coming out of the triennial review that dealt with the possible expansion of joint commercial and residential properties,” Mr Bonig said.