Budget: $450 million more taken from terrorism pool
The Federal Government will take $450 million from the Australian Reinsurance Pool Corporation (ARPC) over the next four years while allocating Treasury $1.2 million to develop options on the pool’s future – including abolishing it.
The previous Government budgeted for an annual $150 million dividend from the fund, or $600 million over four years, but last week’s budget papers say the dividend has been replaced by a $450 million fee over that period to “compensate the Government for the $10 billion guarantee it provides”.
The papers say the fee is “more aligned to the substance of the guarantee provided by the Government to the ARPC”.
The ARPC will have to release funds from its claims reserve to pay the Government.
The pool was established in 2003 after the September 11 2001 attacks on the US made terrorism cover generally unavailable.
The Treasury study on the pool’s future will consider winding down the scheme.
The recent Audit Commission report says the ARPC was always intended as a temporary measure and that with recovery in terrorism insurance markets there is scope for a gradual exit over coming years.