Australia’s terrorism reinsurer, the Australian Reinsurance Pool Corporation, has successfully renewed its retrocession program for the 2016 calendar year. The new $2.9 billion retrocession program plus ARPC’s capital and the $10 billion Commonwealth Guarantee, increases scheme capacity to more than $13.4 billion and requires $3.4 billion in insured losses before the Commonwealth Guarantee is exposed to claims from terrorism events.
“ARPC remains well positioned to protect Australian businesses and the wider Australian economy from economic losses in the event of a Declared Terrorist Incident,” says Dr Chris Wallace, ARPC Chief Executive Officer.
“The benefits of our retrocession program include increased scheme capacity to handle large terrorist events, greater sharing of Australia’s terrorism risk with private sector insurers and reinsurers and less risk for the Federal Government and Australian taxpayers,” Dr Wallace says.
For the 2016 retrocession program, ARPC reduced its retention to $350 million (from $400 million in 2015) and increased retrocession cover purchased to $2.9 billion (from $2.6 billion) for approximately the same dollar amount as the 2015 program. Retrocessionaires have also agreed to expand coverage to include mixed-use and high value residential buildings if the scheme is adjusted by the Federal Government to cover such assets.
The $2.9 billion retrocession program covers approximately $3.4 trillion (by insured value) in Australian-based commercial property sector assets comprising:
- $2.58 trillion – buildings and contents
- $0.66 trillion – business interruption and loss of profits
- $0.18 trillion – contract works
Dr Wallace and Chief Underwriting Officer Mike Pennell met with almost 60 reinsurers in key global markets to negotiate the renewal terms.“We will continue to work with our stakeholders, including Australian insurer cedants, global reinsurers and the Federal Government to ensure we provide value for money,” Dr Wallace said
For media inquiries, please contact ARPC CEO Dr Chris Wallace on (02) 8223-6777.
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