Changes to the Terrorism Insurance Act – What Does it mean for you?
From 1 July 2017, a greater number and wider class of buildings will fall within the Australian Reinsurance Pool Corporation (ARPC) scheme definition of what constitutes a commercial and/or large scheme residential building and will therefore be subject to an ARPC terrorism premium.
From 1 July 2017, a mandatory terrorism premium and cover applies in the following circumstances:
- The building has a commercial floor space of 20% or greater; or
- The building (regardless of whether it’s used as a commercial or residential strata) has a building sum insured of $50M or greater.
These changes apply to all CHU renewals and new business policies incepting from 1 July 2017.
Some implications of the changes for Bodies Corporate
- There will now be a greater number of buildings which will have terrorism cover and attract a terrorism premium;
- All buildings (including residential) with a building sum insured of $50M or greater will now have cover under the ARPC scheme;
- All buildings with a commercial floor space of 20% or greater will now have terrorism premium and cover (this was previously 50% for CHU policies);
- Bodies corporate of large buildings or those with commercial floor space of 20% or greater will see a rise in premium due to the ARPC premium. In the process of setting their 2017/2018 budgets, we recommend that such Bodies Corporate factor in the increase in order to reduce the risk of having a premium shock when a policy renewal is received.
In order to facilitate transparency and full disclosure of the terrorism premium, from 1 July 2017, CHU will clearly show any terrorism premiums on your Insurance Schedule.
Changes to the Terrorism Insurance Act Fact Sheet
To further help you understand the changes to the Terrorism Insurance Act and the possible implications for your Bodies Corporate we have created a “Changes to the Terrorism Insurance Act Fact Sheet“ which you can download.
If you have any further queries about the changes dont hesitate to contact your local CHU Office.