We’ve Listed The Latest Changes to Terrorism Insurance Act 2003 (Cth)(the ACT) Below:
Changes to the Terrorism Insurance Act 2003 (Cth)(the ACT) become effective from July 2017, and some mixed-use commercial and residential strata buildings will see new terrorism levies of up to 16%, plus statutory charges on affected policies.
These changes broaden the definition of eligible property to include buildings with at least 20% of floor space being used for commercial purposes, or schemes which have a single building sum insured of at least $50 million (whether used for commercial or other purposes).
Two key changes in terms of classification of strata buildings from the Australian Reinsurance Pool Corporation (ARPC) are:
- Commercial Strata – Commercial buildings now defined as greater than or equal to 20% commercial floor space ratio, irrespective of tenancy. The result is that all Strata Community Insurance Commercial Strata policies will attract the ARPC terrorism levy.
- Residential Strata – (i) ARPC terrorism levy to be charged on residential schemes where one or more single buildings has a sum insured equal to or greater than $50 million. (ii) Where ARPC coverage under the Act does not apply for schemes consisting of multiple residential buildings having a combined sum insured greater than $50 million, these schemes remain protected under Strata Community Insurance’s specially negotiated terrorism cover up to $100 million. (iii) Schemes consisting of single or multiple residential buildings with a combines sum insured of less than $50 million also remain protected under our specially negotiated terrorism cover.
Tiered approach
Location of the schemes will be a significant component with this upcoming change, given application of a tiered levy model under which physical location is used to determine the rate of levy applicable:
- Classification A 16% levy – capital cities with a population over 1 million
- Classification B 5.3% levy – urban areas with a population over 100,000
- Classification C 2.6% levy – rural areas plus all other areas not captured by A and B
From 1st July 2017 Bodies Corporate will be liable to pay terrorism levies for all renewals and new business if the scheme meets the ARPC criteria.
For schemes that fall outside of the criteria for ARPC cover under the Act, Strata Community Insurance’s terrorism cover will continue to apply – up to $100 million.
*Information supplied by Strata Community Insurance
