The Quarterly Newsletter from the ARPC
Under the Cover – Summer 2010 – no 2010/01

Australian Government
Australian Reinsurance Pool Corporation
In this issue:

•	Message from the CEO
•	Review of Terrorism Insurance Act
•	ARPC visits overseas retrocession markets
•	Successful placement of retrocession renewal
•	ARPC releases 2008-09 Annual Report
•	Remember to submit your gross written premiums
•	RISe and website developments
•	Welcome to new staff
•	A moment with Paul Elton
•	Q and As

Message from the CEO
Welcome to the summer 2010 edition of ‘Under the Cover’. 2009 was another busy and successful year for the ARPC.
Last year saw the second triennial review of the Terrorism Insurance Act 2003. The review found that there is a need for the scheme to continue for at least the next three years. One of the main outcomes as a result of the review is the need to examine the effect of extending the scheme to mixed-use high rise buildings that are not predominately for commercial use, (see page two for full story).
This year, ARPC is proud to be sponsoring the 2010 Reinsurance Rendezvous. The Rendezvous is one of the Australian market's major events and is held biannually, attracting high profile speakers and challenging topics. This year the conference will be held in the beautiful Hunter Valley, from 7-9 March (contact Andrew Martin at ANZIIF on 02 9247 1141).
This edition’s ‘A moment with’ subject is one of our newest staff members, Business Analyst Paul Elton (see page three for full story).
I would like thank our retrocession panel members for their continued support throughout 2009, and I look forward to working with you all again in 2010. I would also like to thank all of our clients for their cooperation in 2009, particularly with providing street level information and the welcome afforded to our cedant review team. I hope you all have a prosperous 2010.

Neil EWeeks
Chief Executive Officer

Review of the Terrorism Insurance Act 2003
The second triennial review of the need for the Terrorism Insurance Act 2003 to continue in operation was conducted during 2009 and the report, ‘Terrorism Insurance Act: Review 2009’ was released by the Treasurer in October last year. The review recommended that the terrorism insurance scheme continue in operation for at least another three years. Another review will be conducted in three years, in accordance with the Act.
The review report also recommended that:
•	premiums continue to be collected at current rates;
•	industry retentions levels remain at the levels that took effect on 1 July 2009;
•	ARPC not be required to maintain a line of credit facility for the scheme, but it should investigate the purchase of additional retrocession; and
•	ARPC examine the effect of extending the scheme to mixed-use, high-rise buildings that are predominately not for commercial use.
The Government has agreed to all of the report's recommendations. Beginning in February, ARPC will consult with relevant stakeholders to examine the issues, collect data and assess the impact of extending the scheme to mixed-use high-rise buildings that are not predominantly for commercial use.
ARPC is required to report to the Minister by September 2010. Any consideration of this issue must have regard to the need to maintain, to the greatest extent possible, private sector provision of terrorism insurance and to allow the re-emergence of commercial markets for terrorism risk cover.
ARPC visits overseas Retrocession markets
Representatives from ARPC, accompanied by a representative from Guy Carpenter, visited reinsurers in the United States, Bermuda, United Kingdom, Paris and Singapore to discuss renewal of ARPC’s terrorism retrocession. Potential new retrocession markets were visited as well as the majority of our current panel of retrocessionaires. All of the existing markets we visited overseas were very supportive of APRC’s retrocession program.
It is encouraging to note that retrocession participants were complimentary about the quality of our exposure information and exposure/blast modelling that has been achieved over the course of 2009.

Successful placement of retrocession renewal
In keeping with its obligation to encourage the return of the commercial terrorism insurance market, ARPC successfully placed its retrocession renewal program for 2010. Cover incepted on 31 December 2009. Because of the positive response from reinsurers, the program cover has increased from $2.3 billion in 2009 to $2.6 billion in 2010. ARPC is pleased to report that 12 new markets have been attracted to the panel and no markets which were on the 2009 program declined to participate in the 2010 program. ARPC intends to continue its retrocession program mainly because it is encouraging the return of the commercial reinsurance market.
In addition, the program:
•	raises the point at which the Commonwealth guarantee will be required; and
•	lessens the risk that a reduction percentage will be required.

ARPC releases 2008-09 Annual Report
ARPC's 2008-09 annual report was tabled in Parliament on 5 November 2009. Financial highlights for the year included:

•	Annual gross written premium of $106.270 million;
•	Annual investment income of $30.416 million; and
•	As at 30 June 2009, the reserve for claims stood at $551.189 million. The annual report is available at: http://www.a rp c .go v .au/ content /pub l i cat ion s /annual_reports/2008_09/html/ARPC_08_09.asp

Remember to submit your gross written premium
During recent cedant reviews we have discovered that some clients are unaware of their obligation under the reinsurance agreement (Clause 5(b)(ii)A & B) to report on their gross written premium (GWP) by the end of each financial year.
 It is vital that we receive clients’ GWP as this is the figure used to set retention levels under the reinsurance agreement. It is suggested that this requirement is logged in your corporate governance register for future reference.
Submitting GWP data each year ensures that retention levels are accurately recorded by ARPC based on current information rather than historical data.

A moment with Paul Elton
Paul joined the Australian Reinsurance Pool Corporation (ARPC) as Business Analyst in October 2009. Having settled into this role, Paul has already developed a business process mapping document, which shows all of ARPC’s major functions and how they relate to each other. Paul is also working on enhancing the Reinsurance Information System (RISe). Previously, Paul worked in similar roles at Diabetes Australia and Telstra.
Paul’s work requires him to liaise with staff from all areas of the organisation. The finished result of Paul’s work on mapping ARPC’s processes will assist staff to increase knowledge and understanding of how the business functions fit together.
In Paul’s previous role at Diabetes Australia, he worked on a number of interesting projects including developing a geospatial map showing trends against demographic and socioeconomic information. Throughout his career, Paul has also being involved in the development of and the ongoing maintenance of point of sales systems in retail stores.
Paul was born in Canberra, but lived in Wollongong and the south coast for a number of years. For the past seven years Paul has called Canberra home. Having travelled extensively throughout Australia, Paul wishes to travel overseas one day to places such as New Zealand’s south island, Canada, Spain and Mexico. In his spare time, Paul plays touch football, cycles and manages a rugby league team. Paul also enjoys live music and cooking.

RISe and website developments
Last year a number of improvements were made to our Reinsurance Information System (RISe). Clients are now able to view broker /group / agent details when reviewing their contact details and are also able to print the premium submission confirmation page.
A new premium return template has been added to RISe. In order to avoid confusion over the financial year, we have locked the ‘Financial Year Ending’ field and will release a new version of the template at the beginning of each financial year. If you wish to submit a return for a previous financial year please contact ARPC’s Senior Business Analyst, Paul Brand on 02 6279 2100 or email Paul.Brand@arpc.gov.au 
This year we are undertaking a major upgrade of RISe to make it even more functional and user-friendly for our clients.

The RISe upgrade will include:
•	a facility for clients to upload detailed street address information;
•	additional and more intuitive reporting tools;
•	personalised information notification for clients and ARPC staff; and
•	a seamless interface between the updated RISe and the ARPC website.
In addition to the RISe upgrades, we are also redeveloping the ARPC website, to improve content, design and functionality.

Welcome to new staff
We have recently welcomed a number of new staff including Financial Accountant Barbara Li, Business Analyst Paul Elton (who is this edition’s ‘A moment with’ person), HR Administrator Ivana Ippoliti and Communications Officer Gemma Youl.

Q and A’s
Question:
Is an ISR policy which covers buildings on a site and vehicles housed in those buildings an eligible insurance contract for the purposes of the Terrorism Insurance (TI Act) or is it excluded by item 18 of the Regulations made under the TI Act?
Answer:
Prima facie, the policy is an eligible insurance contract because it meets the description in s7(1)(a) of the TI Act. Prima facie, the buildings on the site meet the description in sub-paragraph (a) of the definition of eligible property and the vehicles "while they are housed in the sheds overnight" meet the description in sub-paragraph (b) of the definition of eligible property. ARPC interprets Item 18 of the Regulations as concerning motor vehicle insurance, such as comprehensive insurance and third party property insurance.

ARPC Contact Details
Sydney Office
19th Floor 50 Bridge Street
Sydney, NSW, 2000

Postal Address
PO Box R1798
Royal Exchange, NSW, 1225
Phone: 02 8223 6777, Fax: 02 9235 0363

Canberra Office
3rd Floor, Unit 1, 14 Childers Square
Canberra, ACT, 2601
(Note: new Canberra office location)

Postal Address
PO Box 3024
Canberra, ACT, 2601

Phone: 02 6279 2100, Fax: 02 6279 2111
email: enquires@arpc.gov.au
www.arpc.gov.au