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Rising premiums give ARPC coffers a boost

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The Australian Reinsurance Pool Corporation (ARPC) says its financial performance last year was better than expected due to rate rises in underlying commercial insurance premiums.

The operating surplus of $69.1 million was $42.5 million above expectations and the organisation performed well against targets set under the 2019-23 corporate plan, the annual report says.

ARPC gross written premium (GWP) was $233.1 million, representing 4.9% of insurer customer GWP. The percentage remained the same as the previous year.

Insurer customers covered by the ARPC for terrorism risk for commercial property and business interruption policies totalled 227 and the scheme had funding capacity for claims of $13.7 billion.

The capacity is provided through a $10 billion government guarantee, $3.45 billion retrocession cover purchased from 71 global reinsurers and $521 million of ARPC net assets.

ARPC is set for its a triennial review next year and will provide input into research on cyber terrorism, which is currently not covered by the scheme.

The organisation is also working with Standards Australia on a handbook to be published this financial year that will include commentary and resources on risk mitigation for deliberate acts of physical damage.

ARPC says it has provided support related to COVID-19, including for insurers where they are deferring premiums for their business clients, and supporting Treasury projects and policy development related to insurance and reinsurance markets.