Australian Reinsurance Pool Corporation (ARPC) is a public financial corporation established by the Terrorism and Cyclone Insurance Act 2003. 

ARPC has operated a Terrorism Reinsurance Pool (terrorism pool) since 2003. It provides insurance companies with reinsurance for commercial property and related business interruption losses that arise from a declared terrorism incident.  

The terrorism pool was set up after commercial insurers stopped providing terrorism insurance cover after the 11 September 2001 terrorist attacks in the United States. The Australian Government was concerned that the lack of insurance cover for commercial property or infrastructure would lead to less investment in the Australian commercial property sector. 

In July 2022, ARPC started operating a Cyclone Reinsurance Pool (cyclone pool) for cyclones and cyclone-related flood damage. It charges lower reinsurance premiums than the commercial market does.  This reduces some of the input costs to insurers and assists them reduce premiums they charge to their policy holders. However the overall cost of insurance is influenced by other factors as well. 

The cyclone pool and the terrorism pool operate differently. Refer to the cyclone pool and terrorism pool pages for information on each one.  

What is reinsurance?

Reinsurance is insurance for insurers. Insurers transfer portions of their risk portfolios to reinsurers to limit their own risk exposures. Reinsurance allows insurers to remain financially stable, particularly following a large event or series of events. 

ARPC is a government owned public reinsurer.   

Who are ARPC's customers? 

As a reinsurer, ARPC's customers are insurers that issue policies where the underlying property is located in Australia, and the insurer has a signed Reinsurance Agreement with ARPC. ARPC then earns its revenue by charging a premium to insurers for them to transfer their terrorism and cyclone risk to us. Insurers manage their own claims directly with policyholders in accordance with the terms and conditions of underlying insurance policy. Insurers then seek to recover their costs from ARPC once the claim is paid. 

Can insurers set their own premiums? 

Yes, insurers are responsible for setting the premiums they charge to policyholders.  

In the case of the cyclone pool, the Australian Competition and Consumer Commission (ACCC) monitors insurers to make sure that cost savings from lower cost reinsurance provided by the cyclone pool are passed on to the policyholders.