The Terrorism and Cyclone Insurance Act 2003 (TCI Act) was initially enacted by the Commonwealth Parliament following the events of 9/11 in the US and the withdrawal of terrorism cover by insurance companies globally.
Parliament subsequently passed on 31 March 2022 the Treasury Laws Amendment (Cyclone and Flood Damage Reinsurance Pool) Bill 2022 (Bill) to establish a framework for a cyclone and cyclone-related flood damage reinsurance pool. The Bill also amended the Insurance Act 1973 to create a civil penalty for insurers that do not reinsure eligible cyclone risks with the ARPC.
ARPC’s functions and powers are:
- to provide insurance cover for eligible terrorism losses (whether by entering into contracts or by other means);
- to operate a cyclone and related flood damage reinsurance pool by entering into contracts of reinsurance as reinsurer in accordance with Part 2A;
- any other functions prescribed by the regulations.
Section 38 provides that the Minister may give directions to ARPC in relation to the performance of its functions and powers.Â
Since enactment under Section 41 of the Act, at least once every three years the Minister prepared a report reviewing the need for the TCI Act to continue. This review period has now been extended to be undertaken every five years with the next review due to take place as soon as practicable after 1 July 2025. The previous Reviews of the TCI Act may be accessed below.
Cyclone Reinsurance Pool Legislation
On 30 March 2022, Parliament passed the Treasury Laws Amendment (Cyclone and Flood Damage Reinsurance Pool) Bill 2022. The Bill received Royal Assent and became law on 31 March 2022.
The Act amended the Terrorism Insurance Act 2003 to establish a framework for a cyclone and cyclone-related flood damage reinsurance pool. It extended the operation of the terrorism reinsurance pool administered by ARPC and amended the title of the Act to the Terrorism and Cyclone Insurance Act 2003. It also amended the Insurance Act 1973 to create a civil penalty for insurers that do not reinsure eligible cyclone risks with the ARPC.