1Terrorism Insurance Act 2003 – Risk Retention Direction 2017

TERRORISM INSURANCE ACT 2003

Risk Retention Direction

2017

I, Kelly O’Dwyer, Minister for Revenue and Financial Services, give this written direction to the Australian Reinsurance Pool Corporation under paragraph 38(2)(e) of the Terrorism Insurance Act 2003.

Dated 23 March 2017

KELLY O’DWYER

Minister for Revenue and Financial Services

1 Name of Direction

This Direction is the Terrorism Insurance Act 2003 – Risk Retention Direction 2017.

2 Commencement

This Direction commences on 1 July 2017.

3 Repeal

The Treasurer to Australian Reinsurance Pool Corporation (Risk Retention) Direction 2003 and the Treasurer to Australian Reinsurance Pool Corporation (Risk Retention) Direction 2007 are repealed once this Direction takes effect.

4 Definitions

In this Direction:

APRA means the Australian Prudential Regulation Authority.

Corporation means the Australian Reinsurance Pool Corporation.

Date of Expiry means the date and time at which the Reinsurance Agreement expires, according to the terms of the Agreement.

Reinsurance Agreement means a contract of reinsurance between the Corporation and another person (the Reinsured) relating to terrorism risks.

Reinsurance Period means the period from commencement of a Reinsurance Agreement between the Corporation and the Reinsured until termination of that Reinsurance Agreement, according to the terms of that Reinsurance Agreement.

Reinsured’s Retention means the risk to be retained by the Reinsured under a Reinsurance Agreement.

Retention Period means:

(a) initially, the period from the commencement date of the Reinsurance Agreement between the Corporation and the Reinsured to the next 30 June;

(b) thereafter, each period of 12 consecutive calendar months during the Reinsurance Period commencing on 1 July each year;

(c) thereafter, each period of 12 consecutive calendar months commencing on the day following the Date of Expiry.

For the avoidance of doubt, each such period constitutes a separate Retention Period for the purpose of applying the Reinsured's Retention.

Note: Some terms in this Direction, for example, declared terrorist incident, have the same meaning as in the Act.

5 Reinsured’s Retention

(a) A Reinsured’s Retention, calculated in accordance with clause 5(b), shall apply in respect of all declared terrorist incidents which happen during the same Retention Period.