The Martin Place siege in Sydney has raised awareness of the importance of terrorism reinsurance pools, according to the Australian Reinsurance Pool Corporation (ARPC).

Man Haron Monis held staff and customers hostage at the Lindt Café in the Sydney CBD on December 18, resulting in the deaths of café manager Tori Johnson, lawyer Katrina Dawson, and Monis.

An inquest last week heard Monis shot Mr Johnson in the back of the head.

Police responded by storming the building and killing the gunman, and Ms Dawson was struck by fragments of police bullets.

The siege has been classified by the Federal Government as a terrorist event.

ARPC CEO Christopher Wallace told insuranceNEWS.com.au the announcement was appropriate, but in practice “only administrative”.

Insurers had already advised they would pay claims, and while the classification in theory gave them the option of claiming from the ARPC, the estimated $600,000 losses were well inside insurers’ deductibles, which are as high as $10 million.

“This was a tragic event with terrible circumstances, but it was not a big event from an insurance perspective,” Dr Wallace said. “However, the ARPC still plays an important role in being able to advise government.”

The pool was established following the September 11 2001 attacks on the US, which resulted in a global withdrawal of terrorism insurance.

Some commentators believe the private reinsurance market now has the capacity and appetite to provide required cover, and a Treasury review of the ARPC’s future is pending.

“Schemes like this exist in all major western economies,” Dr Wallace told insuranceNEWS.com.au. “The US scheme was recently renewed, and pools for this type of catastrophe risk have value.

“The events of the Sydney siege have created more awareness of the issues.”

Dr Wallace says he cannot understand criticism of the time taken by the Federal Government to classify the siege a terrorism event.

“Insurers had already said they would pay claims and advice needed to be sought.”

Treasurer Joe Hockey made the announcement on January 15, almost a month after the incident, having consulted stakeholders including the ARPC and the Insurance Council of Australia.