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GOVERNMENT COMMITS TO SUSTAINING TERRORISM INSURANCE MARKET
THE HON MICHAEL SUKKAR MP
Assistant Treasurer
Minister for Housing
Minister for Homelessness, Social and Community Housing
MEDIA RELEASE
Friday 10 December 2021
GOVERNMENT COMMITS TO SUSTAINING TERRORISM INSURANCE MARKET
As part of our plan to keep Australians safe and protected from the threat of terrorism, the Morrison Government has today released the 2021 Review of the Terrorism Insurance Act 2003.
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 will accept the recommendation of the Review to continue the Terrorism Insurance Act.
The 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Following the terrorist attacks on the United States of September 2001, cover for terrorism risk was progressively withdrawn by insurance and reinsurance companies.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 periodic reviews 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.
Following a consultation process with stakeholders, the Review concluded that there would be an ongoing market failure in the Australian terrorism reinsurance market in the absence of the scheme.
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.