Sydney Siege Finally Treated as “Act of Terror” for Insurance Purposes

Police in hi-visibility jackets policing crowd control at a UK eIt is pleasing to see that the Federal Treasurer finally made the necessary declaration enabling those with insurance to lodge claims for property and business interruption losses from their insurer with the Australian Reinsurance Terrorism Corporation once their self retention has been exhausted.

I appreciate that there were many things to consider and that the Christmas/New Year period intervened but to take a month to the day for the declaration to be made and this is in my opinion far too long. It has been a long and agonising wait from many business owners effected by the forced shut down of the surrounding streets and businesses during a peak trading period.

When a client has paid an insurance premium and on top of that a flat 12% terrorism levy, in some cases for over 11 years, it is not unreasonable to expect that they be provided with some prompt piece of mind and more importantly, cash flow.

The insurance industry themselves are constantly under pressure to perform in a timely fashion and if this were any other peril, the government, among others, would be critical of such a time lag. The Insurance Council of Australia’s (“ICA”) Code of Practice at clause 7.10 states when it comes to claims that:

7.10 If you make a claim and we require further information or assessment, within ten business days of receiving your claim we will:

  1. notify you of any information we require to make a decision on your claim;
  2. if necessary, appoint a loss assessor or loss adjuster; and
  3. provide an initial estimate of the timetable and process for making a decision on your claim.

Many insurers were not able to meet this standard and in at least one case refused to allow the Insured to even lodge a claim.

Ever since the Cronulla Riots of 2005, the circumstances of which technically fell within the definition of terrorism under most policy exclusions, I have called for a fairer system for the insuring public. To my mind, if an Insured is paying an an insurance premium and an additional levy, which compared to world markets is on the high side, to obtain protection for terrorism, then they should be able to immediately claim off their insurance policy. After that, the insurer then makes a claim against the Australian Reinsurance Terrorism Corporation as they would with any other reinsurance program they may have in place. There should be NO gap between the policy exclusion for terrorism and the cover afforded by the Australian Reinsurance Terrorism Corporation.

I know a number of businesses and brokers that have contacted me for assistance and advice during this long wait and again I say I am extremely pleased for their sakes and that of all the businesses effected that the declaration has now been made. With the 4th review of the Australian Reinsurance Terrorism Corporation to take place this year, I ask that this issue be considered along with the long standing ones such as mixed use strata properties which is a topic in itself.

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