Media Release - August 15 2003

Impacts of the Terrorism Insurance Act 2003

The Terrorism Insurance Act, 2003 (Cth) is now in force (from 1 July 2003) and more details are becoming available to assist us in understanding the impact of the Act on intermediaries and their clients. One key question we want to address now is:

“Is the current Terrorism exclusion on most policies still valid?”

Yes – current policy wordings are NOT changing as a result of the Act. The reinsurance exclusions for terrorism must remain part of policy wordings for two primary reasons:

1. The Regulations themselves (Regulation 37) only apply to qualifying classes of business which have a terrorism exclusion. If we removed the exclusion, then the Pool would not apply; and

2. If there was an act of terrorism as defined by reinsurers which was not deemed to be an act of terrorism under the Government's definition, then insurers would again be exposed to the risk without recourse to either reinsurers or the Pool.