NIBA has provided a submission to the Treasury’s Triennial review of the Terrorism Insurance Act 2003
The National Insurance Brokers Association (NIBA) has provided a submission to the Treasury’s Triennial review of the Terrorism Insurance Act 2003 (the Act). The Act established the Australian Reinsurance Pool Corporation (ARPC) as a statutory authority to administer the terrorism insurance scheme.
Under the Act, the scheme is subject to a review every three years to determine whether government intervention in the terrorism insurance market remains necessary and whether the Scheme meets the needs of the market. In particular, the review focused on whether physical damage caused by a cyber- terrorist attack should be covered under the scheme.
In its submission NIBA stated that while the risk of such events occurring remains low, the rise of Internet of Things (IoT) makes attacks such as these increasingly attractive. NIBA also noted that while the number of connected devices has increased significantly over the past few years, levels of awareness and cyber security have not always kept pace. A survey of SME’s conducted by the Australian Cyber Security Centre found that almost fifty percent rated their cyber security understanding as ‘average’ or ‘below average’.
NIBA noted that a number of commercial insurers offer cover for physical damage and business interruption losses stemming from a cyber-attack as part of their standard property and casualty (P&C) policies. However, most of these policies exclude acts of terrorism.
NIBA argued that given the low capacity currently within the commercial terrorism market, it is unlikely that cover for physical cyber-attacks would be able to be sourced from the commercial market and that the Scheme is best placed to facilitate this cover.
NIBA highlighted a number of examples internationally, where government and co-insurance schemes provide cover for physical-cyber attacks including Terrorism Risk Insurance Program (TRIP) in the United States and the Gestion de l’assurance et de la réassurance des risques attentats et actes de terrorisme (GAREAT) in France.
To view NIBA’s full submission click here.