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Terrorism Insurance – Explained

What is the ARPC – the Australian Reinsurance Pool Corporation?

ARPC is a statutory authority established by the Terrorism Insurance Act 2003, to administer the terrorism reinsurance scheme, providing primary insurers with reinsurance for commercial property and associated business interruption losses arising from a declared terrorist incident.

The Scheme

ARPC’s reinsurance scheme was established after discussions with key industry stakeholders, including insurance and reinsurance companies, banks, representatives of property owners, industry associations, insurance brokers and actuaries.

Through the scheme, insurance companies can choose to reinsure the risk of claims for eligible terrorism losses by paying premiums to ARPC. Consequently, holders of eligible insurance contracts will be covered in the event of a declared terrorist incident (DTI), with insurers required to meet these claims in accordance with the other terms and conditions of individual policies.

Claims against the scheme are met once an individual insurance company’s risk retention is exhausted. ARPC’s pool of retained earnings will meet claims until the agreed retrocession deductible is reached. At this point claims are funded by the retrocession program, of which ARPC is a participant through co-reinsurance. Once retrocession is exhausted, claims will continue to be met by the Commonwealth guarantee.


In 2003, in the aftermath of the terrorist attacks in the United States and following the withdrawal of terrorism insurance cover by insurance companies, the Australian Government established a scheme for replacement terrorism reinsurance. The scheme was introduced as a result of calls for the Government to intervene in an area of clear market failure and after discussions with key industry stakeholders.

ARPC is a statutory authority established by the Terrorism Insurance Act 2003 to administer Australia’s terrorism reinsurance scheme and provide terrorism reinsurance for commercial property, associated business interruption losses and public liability claims.

Basis of the Scheme

The Government decided that any intervention should be consistent with the need to:

  • maintain, to the greatest extent possible, private sector provision of insurance;
  • ensure that risk transferred to the Commonwealth is appropriately priced to minimise the impact on the Commonwealth’s financial position;
  • ensure that the Commonwealth is being compensated by those benefitting from the assistance;
  • allow the commercial insurance and reinsurance markets to re-enter the terrorism market when they are able;
  • be compatible with global solutions.

How the Act Works

The Act overrides terrorism exclusion clauses in eligible insurance contracts to the extent the losses excluded are eligible terrorism losses arising from a declared terrorist incident.

The Act makes terrorism exclusion clauses ineffective for all classes of insurance included in the scheme. This requires insurers to meet eligible claims, in accordance with the other terms and conditions of their policies.

The Act applies to all eligible insurance contracts issued by Australian or offshore insurers. Insurance companies may reinsure their terrorism risk exposure with ARPC.

Review of the scheme

The Act requires that a review of the need for the scheme to continue in operation must be undertaken every three years. Reviews were conducted in 2006, 2009 and 2012. The 2012 review made the following recommendations:

  • the Act continue in operation, subject to a further review within three years;
  • premiums continue to be collected at the current rates;
  • industry retention levels remain unchanged;
  • ARPC is to re-examine the issue  of extending the scheme to mixed use, high rise buildings that are not predominantly for commercial use;
  • ARPC pay a dividend to the Commonwealth of $400 million over four years.

What Does This Mean for your Business Insurance Coverage?

A common inclusion on your policy schedule would read as follows:

XYZ Insurance Compnay has determined that this policy (or part of it) is a policy to which the Terrorism Insurance Act 2003 applies. We have reinsured our liability under the Act with the Commonwealth Government reinsurer, the Australian Reinsurance Pool Corporation (ARPC). As a consequence, we are required to pay a premium to the ARPC and that amount (together with the cost of that part of the cover provided by us and administrative costs associated with the  legislation) is reflected in the premium charged to you.

*This is normally included in Base Premium, and might amount to 1% of Base Premium.


This is Overriden by the Insurers Inclusion within the scheme, and for which you are therefore covered :

Notwithstanding anything contained in this Policy or any endorsement attached to the contrary it is agreed that this Policy excludes death, injury, illness, loss, damage, liability, cost or expense directly or indirectly caused by, contributed to by, resulting from or arising out of
or in connection with any act of terrorism, as defined herein, regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or threat of action designed to influence the government de jure or de facto of any nation or any political division thereof, or in pursuit of political, religious, ideological or similar purposes to  intimidate the public or a section of the public of any nation by any person or group(s) of persons whether acting alone or on behalf of or in connection with any organisation(s) or government(s) de jure or de facto, and which: 1) involves violence against one or more persons; or 2) involves damage to property; or 3) endangers life other than that of the person committing the action; or 4) creates a risk to health or safety of the public or a section of the public; or 5) is designed to interfere with or to disrupt an electronic system.

This Policy also excludes death, injury, illness, loss, damage, liability, cost or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any action in controlling, preventing, suppressing, retaliating against, or responding to any act of terrorism.


employee fraud insurance
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Employee Fraud Insurance


Employee Fraud Insurance or Fidelity Guarantee insures your business against loss of money, negotiable instruments or goods belonging to the business – resulting from an act of fraud committed by an employee.

The cover is in effect if:

  • It is an employee who has committed the fraud
  • The whole of the loss occurred in Australia
  • The fraud is discovered during the period of insurance; generally within a 3 month timeframe of it occurring.
  • The incident is reported to the police and/or prosecuted.

What is Fraud or Fidelity insurance?

Financial losses incurred by workplace crime are not typically covered by property insurance policies. If cover for this risk is required, then fraud, crime or fidelity insurance can be purchased.

Fraud or fidelity insurance is an insurance policy that protects against financial loss from an employee’s or an office holder’s dishonesty.

Crime insurance protects against financial loss whether the attack has come from inside the organisation or has been committed by a third party such as a burglar or computer hacker.

Fidelity insurance can be a standalone policy or can be included as part of Business Pack covers.

Guarding Against Fraud

  • Screening job applicants thoroughly;
  • Creating a positive work environment, where employees feel valued;
  • Making it well known to employees that thieves will be caught;
  • Being aware of staff having financial difficulties – or an unexpected rise in their living standards;
  • Installing a security system;
  • Not allowing one person to handle and control the finances;
  • Taking time to review accounts;
  • Carrying out surprise audits;
  • Not allowing employees’ handbags near cash registers;
  • Paying above minimum wages;
  • Requiring all cheques to have two signatures; and
  • Setting up a system allowing anonymous reporting of co-workers.

Employee Fraud Facts

  • The Australian Federal Police say 70% of all business fraud losses are from staff or former staff, amounting to at least $1.5 billion a year.
  • A 2006 KPMG Fraud Survey showed that 14% of employees taking part in fraudulent conduct had a history of dishonesty with previous employers.
  • False invoicing and theft of cash or inventory were the most common frauds according to the 2006 KPMG Fraud Survey.
  • Experts believe the true level of employee theft is higher than statistics indicate. A 2005 Australian Institute of Criminology report found only one in 17 incidents of employee theft was reported to police.

Please Contact Us for any further discussion on Fidelity or Employee Fraud Insurance – we would be happy to talk through your options and arrange cover.

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5 Insurance Trends Transforming Global Insurance


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Perth Insurance Brokers – Video

Statewide is Perth Insurance Brokers


A recurring question we receive here at Statewide is whether we are Perth Insurance Brokers.  Yes we are.

Perth Insurance Brokers is a registered company owned by Statewide, but as we prefer our traditional name and all encompassing WA name, we continue to trade under the name Statewide Insurance Brokers.

We have been operating under the name Statewide Insurance Brokers since 1976, but in answer to the common question…..Yes, we are Perth Insurance Brokers, and yes we are West Australian Insurance Brokers.  We also service clients on a National level, and right down to the local community.

So What Can an Insurance Broker Help With ?
  • assess and manage your risks, provide advice on insurance solutions;
  • arrange, acquire and maintain insurance;
  • act as your advocate in settlement of any claims.
What Services Does an Insurance Brokers Provide ?
  • select and arrange tailored insurance policies and packages;
  • technical expertise including knowledge of insurance markets, prices, terms and conditions, benefits and pitfalls of the never-ending range of insurance policies;
  • interpret, arrange and complete insurance documentation;
  • predict, manage and reducing risks;
  • claims and settlements advice; and
  • premium funding and risk management reviews.


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Business Interruption Explained – NIBA TV Video

Learn all about Business Interruption Insurance

Business Interruption is generally taken (or should be!) as section 2 of a Business Pack policy, right beside the Property/Fire Section.

The prime purpose of business interruption insurance is to make sure that the financial position of your business returns to where it was before the loss. Your insurer will assess your profits and turnover, and factor in industry variations and trends to gain an understanding of your potential loss after an insured event.

You need to have a property policy in place (Section 1 Property/Fire) in order to be eligible for business interruption insurance, and the damage incurred must be of the type that would be covered under that property policy.

Business interruption insurance also covers various other elements. For example, if you have suffered a major interruption to your business, you might find that you need to spend extra money to get back up and running. You might have additional rent or you might have to pay for temporary premises, or extra costs of employing additional staff to assist in the clean-up process.

These can also all be covered by business interruption insurance, under what is called additional increased cost of working. Often an insurer will advance such monies to minimise downtime, and to ensure your business returns to normal as speedily as possible.

Is it worth taking?  You better believe it. It is NOT an expensive section, and we would be happy to discuss further.  Please contact us for all Business Interruption requirements and enjoy the video below.



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Statewide Insurance Brokers New Website

Statewide Insurance Brokers

Learn about our new Website and Domain Name Change

No more statewideib.net.au or swib.com.au

Statewide Insurance Brokers now at statewideinsurance.com.au