The Australian Reinsurance Pool Corporation (ARPC) will introduce revised postcode allocations for terrorism insurance premiums from Jan. 1, following a new ministerial direction that updates the terrorism insurance framework across urban and regional areas.
The changes are set out in the Terrorism and Cyclone Insurance (Premiums) Amendment (Postcode Update) Direction 2025, issued by Assistant Treasurer and Minister for Financial Services Daniel Mulino on Oct. 20. The direction replaces the postcode tables established under the Terrorism Insurance (Premiums) Direction 2019 and governs how locations are mapped to premium tiers for the purposes of ARPC’s terrorism reinsurance pool.
While the postcode-to-tier mapping is changing, the underlying premium rates in the Reinsurance Agreement for Terrorism Risks (2017) remain the same. For both commercial property and business interruption classes, the tiered rates continue at 16 for Tier A, 5.3 for Tier B, and 2.6 for Tier C, with public liability retaining a nil terrorism reinsurance rate.
ARPC has indicated it will work with cedants in the first quarter of 2026 (Q2 2026), assisting insurers to apply the revised postcode tiers in policy administration, pricing systems, and exposure models. Updated postcode lists and premium guidance material have been published on ARPC’s website for insurers, brokers, and other industry stakeholders.
The tier framework itself is unchanged and continues to reflect population concentration and urban development patterns. Tier A encompasses central business district postcodes in Australian cities with populations above 1 million, including Sydney, Melbourne, Brisbane, Perth, and Adelaide. These CBD zones are treated as the highest exposure band under ARPC’s terrorism pool.
Tier B applies to broader urban areas of all state capital cities and to larger regional centres with populations above 100,000. This includes cities such as Gold Coast, Canberra, Newcastle, Central Coast, Wollongong, Hobart, Geelong, Sunshine Coast, Townsville, and Darwin. Tier C covers all remaining geographic postcodes that are not assigned to Tiers A or B. It also includes any insured property not located on the Australian or Tasmanian mainland but within Australian coastal waters. Insurers writing eligible commercial property and business interruption policies must report exposure and calculate terrorism reinsurance premiums using these three postcode-based tiers.
ARPC conducts periodic reviews of postcode allocations to determine whether development and population changes justify reclassification between tiers. The latest review, which drew on current population statistics and development trends, has resulted in a series of upward and downward reclassifications effective Jan. 1.
According to ARPC, 30 postcodes situated on the fringes of expanding urban areas will move from Tier C to Tier B due to increased development intensity. Examples include:
At the same time, seven postcodes where growth has slowed or stabilised will move from Tier B to Tier C. These include:
No additional CBD or major metropolitan areas have been identified for Tier A classification as part of this review cycle.
Alongside the postcode update, the Australian government has made a legislative adjustment to the terrorism insurance regime. The government has passed the Criminal Code Amendment (State Sponsors of Terrorism) Bill 2025, which amends the Terrorism and Cyclone Insurance Act 2003 (TCI Act). The amendment aligns the TCI Act’s definition of a “terrorist act” with the definition in the Crimes Act 1914, ensuring that the federal terrorism reinsurance scheme explicitly extends to acts involving or supported by foreign state actors where those acts meet the terrorism definition in Australian law.
Under the revised definition, legislation sets out how ARPC may respond to losses arising from state-linked or state-backed incidents, without altering the corporation’s statutory role or the operational mechanics of the reinsurance pool. ARPC chief executive Dr Christopher Wallace said the legislative change responds to shifts in terrorism risk. “This amendment is an important step in ensuring that Australia’s terrorism insurance framework keeps pace with the changing nature of the terrorism risk. It reinforces the Australian government’s commitment to protecting the economy, the domestic insurance industry, and policyholders from potential impacts of terrorism, including those backed or orchestrated by foreign state actors,” Wallace said.
