The Morrison Government is working with the Australian community and international partners to lower the risk of a terrorist attack and strengthen our ability to respond to, and recover from, any attack. This includes ensuring that terrorism insurance remains available for property vulnerable to attack.
Following the terrorist attacks in the United States on September 2001, cover for terrorism risk was progressively withdrawn by insurance and reinsurance companies. Significant commercial and financial difficulties resulted from the withdrawal of such coverage, leading to the delay of investment projects. In response the Australian Government established a Government-owned terrorism reinsurance scheme through the Terrorism Insurance Act 2003. The Act requires that the Government undertake a triennial review to assess if there is an ongoing market failure, where in the absence of the scheme, insurance and reinsurance companies would not provide cover for terrorism risk to commercial property and high value residential and mixed-use property in Australia.
Today I have released the 2018 Review of the Terrorism Insurance Act 2003, following a consultation process with stakeholders. The Review assesses that there would be an ongoing market failure in the Australian terrorism reinsurance market in the absence of the scheme.
The Government has accepted all of the recommendations from the Review. These include:
- No changes to the scope of the scheme.
- No changes to the pricing of the scheme.
- A decrease in the amount of compensation the scheme pays to Government for the financial benefits received. The scheme will pay Government $100 million a year in 2018-19, 2019-20 and 2020-21, down from $147.5 million in 2017-18.
The threat of terrorism remains ever present. While the Government has been successful in disrupting and preventing terrorism, we stand ready to provide an effective response and recovery should an incident occur.