What happens in the event of an eligible terrorism loss?
In the event of an incident which may result in an eligible terrorism loss, all insurers should:
- immediately assess any claims under the terms of the original policy. Any loss estimates received should be provided to ARPC using the RISe Claims System.
- take note of any declared terrorist incident (DTI) formally announced by the Minister.
- be aware of the operation of the Terrorism Insurance Act 2003 in the event of a DTI.
If a DTI occurs:
- a terrorism exclusion in an eligible insurance contract has no effect in relation to a loss or liability to the extent to which the loss or liability is an eligible terrorism loss (section 8 of the Act)
- the Minister may announce a reduction percentage, reducing the amount to be paid under a claim.
- ARPC’s reinsurance arrangements are triggered.
What should commercial property insurers do?
If a suspicious incident occurs, ARPC will notify all nominated contacts that the incident is being investigated by the relevant authorities. The reinsurance agreement obliges the reinsured to advise ARPC as soon as possible of any circumstances likely to give rise to a claim. Before any announcement of a DTI, ARPC will request that all affected reinsureds submit their eligible loss estimates via the RISe Claims System (accessed from the ARPC home page). Information about the RISe Claims system is available from the RISe Claims System Cedant Manual.
What should commercial property owners or tenants do?
Between the time an event occurs and a possible DTI announcement, there are several steps affected policyholders can take. These steps include:
- Contact your insurance broker to inform them of the loss as soon as possible, or
- Contact your commercial property insurer directly if you do not use a broker.
- Arrange with your broker or insurer to have your claim assessed under the terms and conditions of your policy document.
- Whether or not the event is a DTI, your insurer will be providing cover for the insurance loss you experience according to the terms of your insurance policy.
ARPC will confirm any announcement of a DTI to nominated reinsured contacts. On the announcement of a DTI it is the responsibility of the reinsured to assess, adjust and pay eligible terrorism losses on eligible insurance contracts in accordance with the original policy terms and conditions. Reinsureds can now use the RISe Claims System to submit eligible claims for reinsurance recovery from ARPC. It is the responsibility of the cedant to keep ARPC fully informed of any developments regarding the claim.
ARPC will notify all reinsureds if the suspicious incident is announced as non terrorism related and therefore not a DTI.