Retrocession program builds terrorism scheme’s capital strength

Australia’s terrorism insurance scheme has renewed its retrocession reinsurance program for 2021

Written on 26 February, 2021
Tanaya Das

Australia’s terrorism insurance scheme, administered by the Australian Reinsurance Pool Corporation (ARPC), has renewed its retrocession reinsurance program for the 2021 calendar year. The $3.475 billion retrocession reinsurance program, plus ARPC’s net assets and the $10 billion Commonwealth guarantee, provides scheme capacity in the event of a declared terrorism incident, against commercial and eligible property assets of just under $14 billion.

The Scheme’s Chief Executive, Dr Christopher Wallace said,“ARPC’s retrocession program encourages a mix of global and Australian reinsurers to provide terrorism cover for Australian-based property assets, which transfers the risk and protects the Australian Government Guarantee and Australian taxpayers.”

Wallace and Chief Underwriting Officer, Michael Pennell, met online with almost 70 reinsurers in key global markets to negotiate the 2021 program. The $3.475 billion retrocession program and ARPC net assets are the first layers of funding for claims in the event of a terrorism incident.

“For the 2021 program, ARPC purchased an additional $25 million layer of reinsurance at the bottom of the program. This reduced ARPC’s deductible from $250 million to $225 million and improved ARPC’s capital strength.

“ARPC remains well positioned to be an effective provider of terrorism risk insurance that facilitates market participation, supports national resilience and reduces potential losses arising from terrorism catastrophe,” Wallace added.

For detailed information on the breakdown of the 2021 ARPC Retrocession Program, please visit the Scheme’s website.