The Australian Government established a terrorism insurance scheme (the scheme) on 1 July 2003 under The Terrorism Insurance Act 2003 (the Act).
The scheme was designed as a temporary measure to alleviate a market failure and the wider economic impacts due to global reinsurers refusing to underwrite for loss or damage to commercial property due to terrorism following the events in the United States on September 11, 2001. The Act is intended to be a temporary measure to allow the re-emergence of a private reinsurance market for terrorism risk.
The scheme is administered by the Australian Reinsurance Pool Corporation, operating with Government capital and backed by a $10 billion Commonwealth guarantee.
The Minister responsible for the Act is required to prepare a report every three years reviewing whether the scheme should continue. Previous reviews have all recommended the Act remain in force.
The 2021 Review recommends that the Act remain in force and that the scheme remain in place.