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Terror injury, death claims ‘significantly complex’

Caring hands

A government review into Australia’s terrorism insurance framework has found that making a claim in the event of injury or death can be extremely complex, due to the range of schemes and commercial products on offer.

The recent review into Australia’s Terrorism Insurance Act has recommended against extending rules that would provide reinsurance to primary insurers to cover personal injury or death from terrorist attack.

This is despite the report acknowledging that the current array of schemes and products that cover victims of terrorism attack “create significant complexity and may make it difficult for an individual to understand what they may be entitled to”.

Currently, the act offers reinsurance to primary insurers for claims of commercial property damages and business interruption losses due to a declared terrorism incident.


Australians who suffer physical harm in a terrorist incident on Australian soil must seek compensation and/or assistance through a range of government-funded schemes dependent on their circumstances.

This includes applying under workers’ compensation, victims of crime assistance schemes, compulsory third-party insurance, the National Injury Insurance Scheme (NIIS) and/or the National Disability Insurance Scheme (NDIS).

However, according to the report, there exists significant differences between states and territories on the level of cover that can be claimed as well as the accessibility of that coverage.

For example, while all states and territories broadly offer victims of crime compensation to primary victims of terrorism, the amount of compensation available differs from state to state and could be limited if the individual be eligible for compensation under another scheme.

Furthermore, while Western Australians and Victorians can claim under the compulsory third-party insurance scheme for injury or harm caused directly from a motor vehicle used in a terrorism act, South Australians, Victorians and those from the ACT claim under the NIIS, if the injuries sustained were “catastrophic”.

Every state and territory, except Tasmania and Western Australia, offers assistance to those who have sustained a “catastrophic” injury due to an act of terrorism at their workplace, and all jurisdictions provide workers’ compensation scheme cover.

This myriad of government schemes have led stakeholders to voice their concerns that individuals may be confused about what redress is available to them. Many are pushing for consistency across all states and territories.

“A number of industry stakeholders were concerned that, because the availability and level of cover that can be claimed varies significantly between jurisdictions, businesses operating across multiple jurisdictions face a high degree of complexity,” the report said.

“Some stakeholders considered there was scope to harmonise coverage.”

According to the review, the scope of such schemes and the amount of commercial life insurance and related products on the market made it unnecessary for the act to offer reinsurance for claims of personal harm.

The review looked at how much cover is extended to individuals injured or killed in a terrorist incident under current private health insurance, public liability insurance and group life insurance covers.

As a result, it found that “there are life insurance and related products available in the market that provide cover for terrorist incidents causing death or serious personal harm, if individuals are inclined to seek it”.

It concluded that most private health insurance policies do not exclude cover for medical treatment needed due to a terrorism incident.

However, according to APRA, as of 30 September 2018, only 44.9 per cent of the population were covered by hospital treatment cover and 54.1 per cent by some form of extras cover.

The numbers reflect Roy Morgan data released in May which found that more than 256,000 Australians chose not to renew their health insurance in the year to March 2018, primarily due to dissatisfaction with cost and the services covered. This was the highest number in five years.

The review also found that no group life insurance products exclude death, disability or injury as a result of terrorism, whilst acknowledging that the majority of Australians access this life cover through the group cover offered in their superannuation.

However, proposed reforms within superannuation could see those with low balance accounts, new members below the age of 25 or those that have not received a contribution or rollover in more than 13 months have their current group life insurance changed to an opt-in basis.

Furthermore, finder.com.au has previously suggested that up to 95 per cent of Australian families are currently underinsured due to their reliance on insurance in superannuation.

According to Rice Warner data analysed on the comparison website, the median level of cover is approximately $143,500, which is twice the median household income.

However, it is estimated that parents between the age of 20 and 60 need a median of 5.4 years’ worth of income. This far surpasses the average of two years.

Although the government increased default cover inside superannuation to $200,000, finder’s analysis found that there is still an underlying gap in life insurance amongst Australians.

Terror injury, death claims ‘significantly complex’
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