As you are aware, we face the ongoing threat of terrorist attacks. In 2003, the Australian Government launched the Australian terrorism scheme in order to protect the commercial property sector from the global withdrawal of terrorism insurance cover in the wake of the 2001 terrorist attacks in the United States.
In Australia, the scheme is administered by the Australian Reinsurance Pool Corporation (ARPC). The ARPC is a statutory authority established by the Terrorism Insurance Act 2003 to administer the terrorism scheme, providing primary insurer policyholders (such as CCI clients) with protection for insured commercial property and associated business interruption losses, arising from declared terrorist events.
As part of the ARPC scheme. a compulsory levy (based on tier levels) is added to commercial property risks which include Fire and Composite Risks Property Insurance policies. The premiums are collected by CCI on behalf of the ARPC and contribute to the pool of funds available to cover claims from declared terrorist incidents, such as the Lindt cafe siege in Sydney on 15th December 2014.
In late 2015, Kelly O'Dwyer, Minister for Small Business and Assistant Treasurer, provided a Ministerial Direction under the Terrorism Insurance Act 2003 to the ARPC, detailing premium increases which are due to take effect from 1 April 2016.
The increases are a key recommendation of the 2015 Triennial Review of the ARPC by Treasury and apply to insurers (like CCI).
The ARPC levy increases are as follows:
Tier A: 12% to 16%
Tier B: 4% to 5.3%
Tier C: 2% to 2.6%
As a result of the ARPC tier levy changes, all of CCI's Fire and Composite Risks Property (ISR) policy premiums will increase to reflect the ARPC terrorism premium. These changes will take effect from 1 April 2016 and will be reflected in your next policy renewal document.
The premium charged by the ARPC is set by postcode and is split into three tiers according to population density. Allocation of postcodes is as follows:
Postcodes allocated to Tier A are those cities with a population of more than 1 million covering the CBD areas. These include: Sydney, Melbourne, Brisbane, Perth and Adelaide.
Postcodes allocated to Tier B are those covering the urban areas of all state capital cities, and cities with a population over 100,000. These include: Sydney, Melbourne, Brisbane, Perth, Adelaide, Gold Coast, Canberra, Newcastle, Central Coast of New South Wales, Wollongong, Hobart, Geelong, Sunshine Coast of Queensland, Townsville and Darwin.
Postcodes allocated to Tier C are those geographic postcodes not allocated to either A or B. Any property not on the mainland of Australia or Tasmania, but within Australian coastal sea is designated Tier C.
If you're unclear about these changes, or would like more information, please contact your Account Executive or contact CCI via either of the following:
Phone: 1800 011 028
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