Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document

 14 TERRORISM INSURANCE BILL 2003—SENATE'S AMENDMENTS

The order of the day having been read for the consideration of the amendments made by the Senate—

On the motion of Mr Slipper (Parliamentary Secretary to the Minister for Finance and Administration), the amendments were disagreed to, after debate.

Mr Slipper presented reasons, which were circulated, and are as follows:

Reasons of the House of Representatives for disagreeing to the amendments of the Senate

Senate Amendment 1

Amendment 1 to the Bill imposes a requirement that the 3-yearly review reports on the continued need for the Act be tabled in both Houses of Parliament within 10 sitting days of the Minister receiving the report.

The House of Representatives rejects this amendment. It contains too prescriptive an approach for reports which could, for example, contain commercially sensitive material. Absent such material, it is proposed that the reports will, as a matter of course, be made public. There is therefore no need to take such a rigid approach.

Senate Amendment 2

Amendment 2 inserts an amendment to the Trade Practices Act 1974to give the ACCC powers to prevent price exploitation by insurers following the implementation of the terrorism insurance scheme.

The House of Representatives rejects this amendment.

Formal prices surveillance and controls should only be considered if competitive pressures are insufficient to ensure efficient prices and protect consumers. The general insurance industry in Australia does not exhibit monopoly characteristics. The ACCC pointed out in the second Insurance Industry Market Pricing Review, released in September 2002, that while the top 10 insurance companies write 71 per cent of business, no market participant has significant market power.

The terrorism insurance scheme does not give insurers increased scope to exploit policyholders. The premium charged by the Australian Reinsurance Pool Corporation (ARPC) for terrorism reinsurance will be a percentage of the existing underlying property insurance premium. As such, if an insurer that purchases terrorism insurance from the ARPC lifts its premium by a greater amount than other insurers, then the policyholder would have a strong incentive to shop around. In the March quarter 2003, 43 insurers were providing insurance for Fire and Industrial Special Risks for commercial property in Australia.


Prices surveillance imposes additional costs on industry and administrative costs on governments, which in turn are passed on to consumers and taxpayers.

On the motion of Mr Slipper, the reasons were adopted.