SSKB recently received notification regarding changes by the Australian Reinsurance Pool Corporation (ARPC) regarding an extension to the definition of a commercial building and this will affect some strata communities from 1 July 2017.
The following is an excerpt from Insurance Aid General Brokers (IAGB), we have attached the full statement Extension of the Terrorism Insurance Scheme which also includes Frequently Asked Questions about these changes.
We also invite our clients to contact your SSKB Community Manager with any questions you may have.
The Australian Reinsurance Pool Corporation (ARPC) is responsible for collecting a terrorism levy for commercial buildings under the Terrorism Insurance Act 2003.
Recently the ARPC changed how they define a commercial building and this will have an effect on insurance policies for some bodies corporate.
Some mixed-use and residential buildings that previously did not attract a terrorism levy, will now have to pay a premium from their next renewal after July 1 2017.
Please be aware of the changes to the insurance premium.
Scope of changes to the Terrorism Insurance Scheme
The changes will:
- broaden the definition of eligible property to include buildings with a floor space of at least 20% used for commercial purposes or which have a building sum insured of at least $50 million, whether used for commercial or other purposes (effective on contracts of insurance issued or renewed for July 1); and
- amend the Terrorism Insurance Act 2003 to extend the definition of a terrorism exclusion or exception in an eligible insurance contract to include acts described as “chemical”, “biological”, “polluting”, “contaminating”, “pathogenic”, poisoning” or words of similar effect.
Implications for your policy From 1 July 2017
The Insurers will be required to collect Terrorism Insurance Scheme premiums on behalf of the ARPC. From 1 July 2017, this will be reflected in the premiums for the following property segments:
- residential strata properties with a building sum insured equal to or greater than $50 million; and
- all other strata properties with at least 20% commercial floor space.
Benefits of the extension to the scheme
In the event of economic loss caused by a terrorism catastrophe, these changes will bring additional protection to the Australian strata community.
There is now reduced ambiguity for large residential and mixed use buildings that previously may have fallen outside the scheme and therefore would be uninsured in the event of a terror attack.