Most commercial property clients have never had cause to ask whether their terrorism exclusion would survive a declared incident. Australia's Terrorism Reinsurance Pool has now been formally activated three times since 2003 - after the 2014 Lindt Café siege, and twice more inside a single financial year in 2025-26.
That clustering means a growing number of clients may start asking the question, and the answer isn't always straightforward.
The Bondi Beach attack on December 14, 2025, was declared a terrorism incident by Treasurer Jim Chalmers under the Terrorism and Cyclone Insurance Act 2003.
The Insurance Council of Australia's 2025-26 Catastrophe Resilience Report puts the final cost at $570,542 across 38 claims, small enough that the Pool itself was not drawn on.
Six weeks later, on January 26, 2026, an attempted bombing targeting a crowd in the Perth CBD triggered a second declaration under the same Act. It caused no property damage or injuries, and ARPC has said no insured losses are expected from it.
That's the detail worth sitting with. Two declarations landed in five months, and neither generated a real claims event. ARPC's response to that clustering wasn't to buy more protection for itself - its 2026 retrocession programme, finalised in February, arranged $2 billion of cover with a $500 million deductible, a reduced limit and a raised deductible compared with prior arrangements.
ARPC chief executive Dr Christopher Wallace said the placement "reflects a disciplined approach in current market conditions" after the corporation met 35 reinsurers across Australian and international markets.
Retrocession is one layer among several: it sits above ARPC's own retention and below the $10 billion Commonwealth guarantee, which remains the final backstop regardless of what private cover ARPC buys beneath it.
What's notable is that the layer ARPC controls directly got smaller in a year when declarations doubled up.
There's a second, more immediate reason this matters at renewal. ARPC's terrorism reinsurance charge runs across three postcode tiers, with rates of 16% of gross written premium in Tier A, 5.3% in Tier B and 2.6% in Tier C.
Those tier boundaries changed on 1 July 2026: thirty postcodes on the fringes of urban growth areas moved from Tier C to Tier B, while seven where development had slowed moved the other way.
For any client in a reclassified postcode, that's a jump from a 2.6% loading to 5.3% on gross written premium, embedded quietly inside the renewal rather than flagged as a standalone change.
Anyone who hasn't checked a client's postcode against ARPC's current list since July risks quoting the wrong figure.
None of this happens automatically just because an incident gets called terrorism in the news. The relevant provisions of the Act only take effect once the responsible minister makes a formal declaration, and it's that declaration, not the event itself, that renders terrorism exclusions ineffective for eligible losses. In the Bondi case, that meant affected businesses could have claims assessed and paid under ordinary policy terms rather than knocked back on an exclusion clause. Almost 80% of those 38 claims were finalised within six months, and roughly three-quarters of the losses sat with local businesses rather than individuals.
One further wrinkle worth carrying into client conversations: ARPC set the reduction percentage for the Bondi declaration at zero, meaning none of the eligible insurer liabilities were discounted for reinsurance recovery purposes. Whatever claims did arrive were backed at full strength, not a reduced rate.
It's a distinction that only matters when an incident actually produces losses - the scenario clients may increasingly want clarity on, given two declarations landed in the same year.
The ICA's 2025-26 report covers seven declared events in total, including the Bondi attack, and puts losses across all of them at $3.98 billion from 147,552 claims.
That total spans floods, storms, hail, bushfire and the Bondi terrorism declaration, plus a separate Significant Event for the Middle East conflict, which did not involve the Terrorism Pool since standard war exclusions applied throughout.
The costliest single event, November's Queensland and NSW hailstorms, accounted for $2.2 billion of that total on its own. Set against those weather losses, the terrorism figures are small in dollar terms - but the exclusion clause most clients have never had reason to question has now been tested twice in one year, against a Pool carrying a smaller private retrocession layer than it held before.
