Insurance Council of Australia (ICA) Executive Director Alan Mason welcomed the new terrorism legislation, saying that without it many building and development projects could not obtain funding from banks, “with a potentially disastrous impact on future infrastructure development.”

“The general insurance industry has worked closely with the Government and other stakeholders to ensure that there was a scheme in place to provide certainty to the owners of commercial property,” Mr Mason said.

That would seem to contradict the opinions of many senior brokers in the market who believe there is – and always has been – sufficient capacity in the global reinsurance market to handle the Australian risks at competitive rates. Several Lloyd’s underwriters have been particularly critical of the arrangement, with one suggesting their approaches to the Government for greater industry participation were ignored because Treasury bureaucrats had set their minds on a Government-administered pool.

Mr Mason said delays in the Senate arising from the Democrats and Labor Party initially challenging the Bill means the timing for insurers to get systems in place by July 1 is extremely tight. Premiums for terrorism will apply to policies from October 1.

ICA Corporate Affairs Manager Rod Frail told Sunrise Exchange News the council is conscious of the tax issue, but it had been made clear “by building industry groups like the Australian Bankers Association and the Property Council” that without terrorism cover the county’s infrastructure could be compromised.

“Without terror cover the banking sector wouldn’t issue loans to builders and developers, and you can imagine what that could potentially do to the economy,” he said.