Since Australia’s terrorism reinsurance scheme launched in 2003, the mechanism that overrides terrorism exclusion clauses in commercial property policies has been formally triggered just three times. Two of those triggers occurred in the same financial year – and when the first one was declared, brokers were immediately on the front line. When the Australian Reinsurance Pool Corporation (ARPC) declared the Bondi Beach attack a terrorism incident in December 2025, the Insurance Council of Australia (ICA) declared it a Significant Event, with ICA CEO Andrew Hall saying: “The industry is committed to supporting those Bondi businesses impacted through the recovery ahead.” For brokers, the declaration confirmed that eligible terrorism-related losses were backed by the national reinsurance scheme, enabling brokers to give clients clear guidance on what cover applies, how exclusions are treated, and what steps policyholders should take to access support.
According to ARPC’s declarations register, the complete list of terrorism incidents declared under the Terrorism and Cyclone Insurance Act 2003 (TCI Act) since the scheme commenced is the Lindt Cafe siege in Sydney in 2014, the Bondi Beach attack in December 2025, and the Perth CBD incident in January 2026. That concentration – two of three total declarations in a single financial year – is the most operationally significant context in ARPC’s 2026-30 Corporate Plan, released August 25, 2026, for brokers managing commercial property books in major urban centres.
The terrorism pool does not activate simply because an incident is reported or assessed as terrorism. The provisions of the TCI Act relating to eligible terrorism losses take effect when the responsible minister formally declares a terrorist incident under the Act. ARPC said following the Bondi Beach attack that the declaration enabled the relevant TCI Act provisions to take effect, rendering terrorism exclusions in eligible insurance contracts ineffective to the extent they relate to eligible terrorism losses arising from the declared incident.
When ARPC confirmed the Bondi declaration, Dr Christopher Wallace said: “The Terrorism Reinsurance Pool exists to safeguard the Australian insurance market from the financial impact of rare but severe terrorism events. The declaration ensures insurers can apply the TCI Act provisions and begin assessing eligible claims under the framework of the scheme.” The Perth incident – the attempted bombing of a crowd on January 26, 2026 – did not result in property damage or injuries, with no insured losses expected, and ARPC confirmed the declaration reflects that the incident meets the definition of a terrorism event under the TCI Act. Both 2025-26 events were declared; neither generated claims. The pool’s value to clients sits in the scenario where losses do arise – and explaining that distinction at renewal, including which policy types are eligible and which exclusions are overridden only upon a ministerial declaration, is a direct broker responsibility. In its November 2025 submission to the TCI Act statutory review, the ICA stated it supports the terrorism pool’s existence and design, noting that the ongoing terrorism risk necessitates the pool to continue to provide coverage.
ARPC’s terrorism premiums operate across three postcode tiers based on population density: Tier A covers CBD areas of Australian cities with a population of over one million; Tier B covers urban areas of all state capital cities and cities with a population of over 100,000; and Tier C covers all remaining postcodes. The reinsurance premium rates are 16% of gross written premium for Tier A, 5.3% for Tier B, and 2.6% for Tier C.
Those tier allocations changed on July 1, 2026. Thirty postcodes on the edges of urban areas where substantial development is occurring were reclassified from Tier C to Tier B, while seven postcodes where development activity had slowed or stabilised were reclassified from Tier B to Tier C. For commercial property clients in reclassified postcodes, the terrorism reinsurance loading on their gross written premium shifted at the July 1, 2026, renewal date – from 2.6% to 5.3% for those upgraded to Tier B. Brokers who have not verified updated tier assignments against ARPC’s current published postcode list may be presenting clients with incorrect premium disclosures.
Average home insurance premiums in the highest cyclone risk areas have fallen 37% since the cyclone pool commenced in July 2022. But those headline figures sit alongside a picture that the National Insurance Brokers Association (NIBA) has raised formally. NIBA, responding to the Australian Competition and Consumer Commission’s (ACCC) cyclone pool monitoring report, stated it remained concerned that a significant number of households continue to see little or no relief in their premiums and expressed disappointment that insurance-based taxes – which it says continue to undermine affordability – were not addressed.
ARPC’s analysis of insurance take-up and coverage gaps in northern Australia highlights a significant gap between home buildings and contents cover. The report puts home-building insurance take-up across cyclone-exposed regions at 91%, compared with 62% for home contents. It also finds that contents insurance take-up varies significantly by socioeconomic conditions, with take-up in areas with the lowest economic resources around 36% below that of the highest-resource areas. NIBA has called for the Disaster Ready Fund to be expanded and indexed as a rolling 10-year program alongside a national co-funded household mitigation scheme, noting that stamp duty, emergency services levies, and GST can add up to 70% to premiums – a structural barrier to adequate cover that contributes directly to underinsurance and non-insurance.
NIBA said the review is the first statutory review of the cyclone pool since its 2022 commencement, noting that climate risks and weather-related losses have continued to drive up insurance costs and reinsurance premiums and that affordability and accessibility remain ongoing challenges. The ACCC published its fifth and final insurance monitoring report on June 25, 2026, with its monitoring role concluding on June 30. The statutory review now represents the government’s main current examination of the pools’ design and effectiveness.
Any structural change to pricing methodology, mandatory participation thresholds, or eligibility criteria would flow through insurer reinsurance costs and, in turn, to the premiums brokers present to clients in cyclone-exposed regions. ARPC's consolidated gross written premium for 2026-27 is forecast at $1,113.3 million across both pools, with total funding available for claims at $23,013.9 million, each pool backed by a separate $10 billion Commonwealth guarantee.
