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This is a Bill, not an Act. For current law, see the Acts databases.
2002-2003
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
As read a third
time
Terrorism
Insurance Bill 2003
No. ,
2003
A Bill for an Act
relating to insurance cover for terrorist acts, and to other
matters
Contents
THIS Bill originated in the House of Representatives; and,
having this day passed, is now ready for presentation to the Senate for its
concurrence.
I.C. HARRIS
Clerk
of the House of Representatives
House of Representatives
27 March
2003
A Bill for an Act relating to insurance cover for
terrorist acts, and to other matters
The Parliament of Australia enacts:
This Act may be cited as the Terrorism Insurance Act
2003.
This Act commences on the day on which it receives the Royal
Assent.
In this Act, unless the contrary intention appears:
Australia includes Norfolk Island.
Note: See also paragraph 17(a) of the Acts Interpretation
Act 1901 (which includes the Territory of Christmas Island and the Territory
of Cocos (Keeling) Islands) and section 15B of the Acts Interpretation
Act 1901 (which includes the coastal sea).
Corporation means the Australian Reinsurance Pool Corporation
established by section 9.
declared terrorist incident means an act or acts declared
under section 6 to be a declared terrorist incident.
eligible insurance contract has the meaning given by
section 7.
eligible property means the following property that is
located in Australia:
(a) buildings (including fixtures) or other structures or works on, in or
under land;
(b) tangible property that is located in, or on, property to which
paragraph (a) applies;
(c) any other property prescribed by the regulations.
Note: Roads, tunnels, dams and pipelines are examples of
eligible property.
eligible terrorism loss means a loss or liability arising
from a declared terrorist incident, but does not include a loss or liability
arising from the hazardous properties (including radioactive, toxic or explosive
properties) of nuclear fuel, nuclear material or nuclear waste.
excess means an amount of an insurance claim that is to be
paid or borne by the insured.
member means a member of the Corporation, and includes the
Chair.
own, in relation to eligible property, includes:
(a) owning the property together with another person or other persons;
and
(b) having an insurable interest in the property.
reduction percentage means a reduction percentage specified
in a declaration under section 6, and includes such a percentage as varied
under that section.
startup time means the beginning of 1 July
2003.
terrorist act has the meaning given by
section 5.
Unless the contrary intention appears, this Act extends to acts,
omissions, matters and things outside Australia.
(1) In this Act, terrorist act means an action or threat of
action where:
(a) the action falls within subsection (2) and does not fall within
subsection (3); and
(b) the action is done or the threat is made with the intention of
advancing a political, religious or ideological cause; and
(c) the action is done or the threat is made with the intention
of:
(i) coercing, or influencing by intimidation, the government of the
Commonwealth or a State, Territory or foreign country, or of part of a State,
Territory or foreign country; or
(ii) intimidating the public or a section of the public.
(2) Action falls within this subsection if it:
(a) causes serious harm that is physical harm to a person; or
(b) causes serious damage to property; or
(c) causes a person’s death; or
(d) endangers a person’s life, other than the life of the person
taking the action; or
(e) creates a serious risk to the health or safety of the public or a
section of the public; or
(f) seriously interferes with, seriously disrupts, or destroys, an
electronic system including, but not limited to:
(i) an information system; or
(ii) a telecommunications system; or
(iii) a financial system; or
(iv) a system used for the delivery of essential government services;
or
(v) a system used for, or by, an essential public utility; or
(vi) a system used for, or by, a transport system.
(3) Action falls within this subsection if it:
(a) is advocacy, protest, dissent or industrial action; and
(b) is not intended:
(i) to cause serious harm that is physical harm to a person; or
(ii) to cause a person’s death; or
(iii) to endanger the life of a person, other than the person taking the
action; or
(iv) to create a serious risk to the health or safety of the public or a
section of the public.
(1) If the Minister, after consulting the Attorney-General, is satisfied
that, after the startup time:
(a) a terrorist act has happened in Australia; or
(b) 2 or more related terrorist acts have happened in Australia;
then the Minister must, by notice in the Gazette, declare that the
act constitutes, or the acts together constitute, a declared terrorist incident
for the purposes of this Act.
(2) A terrorist act cannot be taken into account for the purposes of
subsection (1) if the Minister is satisfied that it is an act of
war.
(3) A terrorist act that consists merely of a threat of action cannot be
taken into account for the purposes of subsection (1) unless the Minister
is satisfied that the threat resulted in economic loss to a person.
(4) A terrorist act that consists of threatened action is taken to have
happened in Australia if, and only if, the threatened action would happen in
Australia.
(5) A declaration under this section cannot be revoked.
(6) A declaration under this section may specify a reduction percentage
that applies to the declared terrorist incident for the purposes of
section 8.
(7) A reduction percentage must be specified if the Minister considers
that, in the absence of a reduction percentage, the total amounts paid or
payable by the Commonwealth under section 35 (including amounts not related
to the act or acts specified in the declaration) would be more than $10,000
million.
(8) The Minister may, by notice in the Gazette, vary the reduction
percentage, but only by making it smaller. The percentage may be varied more
than once.
(9) The Minister may delegate his or her powers under this section
to:
(a) the Secretary of the Department; or
(b) an SES employee, or acting SES employee, in the Department.
(1) A contract of insurance is an eligible insurance
contract to the extent that it provides insurance cover for one or more
of the following:
(a) loss of, or damage to, eligible property that is owned by the
insured;
(b) business interruption and consequential loss arising from:
(i) loss of, or damage to, eligible property that is owned or occupied by
the insured; or
(ii) inability to use eligible property, or part of eligible property,
that is owned or occupied by the insured;
(c) liability of the insured that arises out of the insured being the
owner or occupier of eligible property.
(2) A contract covered by subsection (1) is not an eligible insurance
contract to the extent to which it is:
(a) a contract of reinsurance; or
(b) prescribed by the regulations for the purposes of this
subsection.
(3) A contract of insurance is not an eligible insurance contract if it is
made in the course of State insurance not extending beyond the limits of the
State concerned.
(4) This section extends to contracts made before the commencement of this
section.
(1) A terrorism exclusion in an eligible insurance contract has no effect
in relation to a loss or liability to the extent to which the loss or liability
is an eligible terrorism loss.
(2) For the purposes of subsection (1), terrorism
exclusion means an exclusion or exception (however described)
for:
(a) acts that are described using the word “terrorism” or
“terrorist” or words of similar effect; or
(b) other acts (however described) that are substantially similar to
terrorist acts as defined in section 5.
(3) If:
(a) apart from this subsection, an amount (the base amount)
would be payable under the contract, solely because of this section, in respect
of a declared terrorist incident; and
(b) a reduction percentage applies to the declared terrorist incident;
and
(c) if the contract was made on or after 1 October 2003—the
insurer is reinsured with the Corporation in respect of the whole or a part of
the insurer’s liabilities under the contract that arise solely because of
this section;
then the base amount is to be reduced by the reduction
percentage.
(4) The Corporation is liable to compensate an insurer for:
(a) a liability incurred by the insurer under a protected contract, to the
extent that the liability arises solely because of this section; and
(b) expenditure incurred by the insurer in connection with, or arising
from, the assessment, management, conduct, rejection, defence or settlement of a
claim by the insured, to the extent to which the claim is:
(i) under a protected contract; and
(ii) in respect of a liability that arises (or is alleged to arise) solely
because of this section.
For the purposes of this subsection, protected contract means
an eligible insurance contract that is in force at the startup time or is
entered into after the startup time and before 1 October
2003.
The Australian Reinsurance Pool Corporation is established by this
section.
The Corporation has the following functions:
(a) to provide insurance cover for eligible terrorism losses (whether by
entering into contracts or by other means);
(b) any other functions that are prescribed by the regulations.
(1) The Corporation has power to do all things necessary or convenient to
be done for or in connection with the performance of its functions.
(2) For the avoidance of doubt, the powers of the Corporation
include:
(a) the power to charge premiums in respect of contracts of insurance for
which it is the insurer; and
(b) the power to charge fees for services that it provides in connection
with the performance of its functions.
(1) The Corporation consists of the following members:
(a) a Chair;
(b) at least 4, but not more than 6, other members.
(2) The Corporation:
(a) is a body corporate with perpetual succession; and
(b) must have a seal; and
(c) may acquire, hold and dispose of real and personal property;
and
(d) may sue and be sued in its corporate name.
(1) The members of the Corporation are to be appointed in writing by the
Minister, on a part-time basis.
(2) A member holds office for the period specified in the instrument of
appointment. The period must not exceed 4 years.
(3) The Minister must not appoint a person as a member unless the Minister
is satisfied that the person:
(a) has suitable qualifications or experience; and
(b) is of good character.
(4) The appointment of a member is not invalid merely because of a defect
or irregularity in connection with the member’s appointment.
(1) The Minister may appoint a member to act as the Chair:
(a) during a vacancy in the office of Chair (whether or not an appointment
has previously been made to the office); or
(b) during any period, or during all periods, when the Chair is absent
from duty or from Australia, or is, for any reason, unable to perform the duties
of the office.
(2) Anything done by or in relation to a person purporting to act under an
appointment is not invalid merely because:
(a) the occasion for the appointment had not arisen; or
(b) there was a defect or irregularity in connection with the appointment;
or
(c) the appointment had ceased to have effect; or
(d) the occasion to act had not arisen or had ceased.
A member holds office on the terms and conditions (if any) in relation to
matters not covered by this Act that are determined by the Minister.
A member must not engage in any paid employment that, in the
Minister’s opinion, conflicts or may conflict with the proper performance
of the member’s duties.
(1) A member is to be paid the remuneration that is determined by the
Remuneration Tribunal. If no determination of that remuneration by the Tribunal
is in operation, the member is to be paid the remuneration that is
prescribed.
(2) A member is to be paid the allowances that are prescribed.
(3) This section has effect subject to the Remuneration Tribunal Act
1973.
The Chair may grant leave of absence to any other member on the terms and
conditions that the Chair determines.
A member may resign his or her appointment by giving the Minister a
written resignation.
(1) The Minister may terminate a member’s appointment for
misbehaviour or physical or mental incapacity.
(2) The Minister may terminate a member’s appointment if:
(a) the member:
(i) becomes bankrupt; or
(ii) applies to take the benefit of any law for the relief of bankrupt or
insolvent debtors; or
(iii) compounds with his or her creditors; or
(iv) makes an assignment of his or her remuneration for the benefit of his
or her creditors; or
(b) the member is absent, except on leave of absence, from 3 consecutive
meetings of the Corporation; or
(c) the member engages in paid employment that, in the Minister’s
opinion, conflicts or could conflict with the proper performance of the duties
of his or her office; or
(d) the member fails, without reasonable excuse, to comply with
Subdivision B of Division 4 of Part 3 of the Commonwealth
Authorities and Companies Act 1997; or
(e) the Minister is of the opinion that the performance of the member has
been unsatisfactory for a significant period of time.
(1) The Corporation must hold such meetings as are necessary for the
efficient performance of its functions.
(2) The Chair:
(a) may convene a meeting at any time; and
(b) must convene a meeting on receipt of a written request signed by at
least 2 other members.
(3) Meetings are to be held at such places as the Chair
determines.
(1) The Chair presides at all meetings at which he or she is
present.
(2) If the Chair is not present at a meeting, the members present are to
appoint one of their number to preside.
(3) A quorum is constituted by a majority of the members for the time
being holding office.
(4) A question is decided by a majority of the votes of the members
present and voting.
(5) The person presiding at a meeting has a deliberative vote and, if
necessary, also a casting vote.
Note: Subdivision B of Division 4 of Part 3 of the
Commonwealth Authorities and Companies Act 1997 has rules for
“directors” about disclosing, and voting on matters involving,
material personal interests.
(6) Subject to this section, the procedure is to be as determined by the
Corporation.
If the Corporation so determines, a resolution is taken to have been
passed at a meeting of the Corporation if:
(a) without meeting, a majority of the members indicate agreement with the
resolution in accordance with the method determined by the Corporation;
and
(b) that majority would have constituted a quorum at a meeting of the
Corporation.
(1) There is to be a Chief Executive of the Corporation.
(2) The Chief Executive is to be appointed in writing by the Corporation
on a full-time basis.
(3) A member of the Corporation cannot be appointed as Chief
Executive.
(4) The appointment of a person as Chief Executive is not invalid merely
because of a defect or irregularity in connection with the person’s
appointment.
(1) The Chief Executive is to manage the affairs of the Corporation
subject to the directions of, and in accordance with policies determined by, the
Corporation.
(2) A thing is taken to have been done by the Corporation if it is done in
the name of the Corporation, or on behalf of the Corporation:
(a) by the Chief Executive; or
(b) with the authority of the Chief Executive.
The Corporation may at any time terminate the appointment of the Chief
Executive.
(1) The Corporation may appoint a person to act as the Chief Executive for
a period not exceeding 3 months:
(a) during a vacancy in the office of Chief Executive (whether or not an
appointment has previously been made to the office); or
(b) during any period when the Chief Executive is absent from duty or from
Australia, or is, for any reason, unable to perform the duties of the
office.
(2) If, at the end of the 3 month period:
(a) there continues to be a vacancy in the office of Chief Executive;
or
(b) the Chief Executive continues to be absent or unable to perform the
duties of the office;
then the Minister, on the recommendation of the Corporation, may appoint a
person to act as the Chief Executive.
(3) Anything done by or in relation to a person purporting to act under an
appointment is not invalid merely because:
(a) the occasion for the appointment had not arisen; or
(b) there was a defect or irregularity in connection with the appointment;
or
(c) the appointment had ceased to have effect; or
(d) the occasion to act had not arisen or had ceased.
(4) An appointment under this section must be in writing.
The Chief Executive holds office on the terms and conditions (if any) in
relation to matters not covered by this Act that are determined in writing by
the Corporation.
The Chief Executive must not engage in paid employment outside the duties
of his or her office except with the approval of the Corporation.
The Chair may grant leave of absence to the Chief Executive on the terms
and conditions that the Chair determines.
The Chief Executive may resign his or her appointment by giving the
Minister a written resignation.
(1) The Corporation may employ such persons as it considers necessary for
the performance of its functions and the exercise of its powers.
(2) An employee is to be employed on the terms and conditions that the
Corporation determines in writing.
(1) The Corporation may engage persons having suitable qualifications and
experience as consultants to the Corporation.
(2) The consultants are to be engaged on the terms and conditions that the
Corporation determines in writing.
(1) The Corporation’s money is to be applied only:
(a) in payment or discharge of the expenses, charges, obligations and
liabilities incurred or undertaken by the Corporation in the performance of its
functions and the exercise of its powers; and
(b) in payment of remuneration and allowances payable under this
Act.
(2) Subsection (1) does not prevent investment of surplus money of
the Corporation under Division 3 of Part 3 of the Commonwealth
Authorities and Companies Act 1997.
(1) The Commonwealth guarantees the due payment of money that may become
payable by the Corporation to any person other than the Commonwealth.
(3) If at any time the Corporation considers it likely that it will be
unable to discharge all its liabilities, after taking into account the guarantee
under this section, then the Corporation must give the Minister a written notice
to that effect.
The Corporation is not subject to income tax under a law of the
Commonwealth.
The Consolidated Revenue Fund is appropriated for:
(a) payment to the Corporation of amounts borrowed by the Corporation from
the Commonwealth; and
(b) payments by the Commonwealth under section 35.
(1) The Minister may give written directions to the Corporation in
relation to the performance of its functions and the exercise of its
powers.
(2) The directions that may be given under subsection (1) include the
following:
(a) directions requiring the Corporation to pay money to the
Commonwealth;
(b) directions requiring the Corporation to enter into contracts to borrow
money from the Commonwealth;
(c) directions requiring the Corporation to enter into contracts to borrow
money from persons other than the Commonwealth;
(d) directions setting premiums that are to be charged by the Corporation
in respect of contracts of insurance;
(e) directions relating to the extent to which risk is to be retained by
the insured under a contract of reinsurance with the Corporation.
(3) Without limiting paragraph (2)(a), a direction under that
paragraph may require the Corporation to make the following payments to the
Commonwealth:
(a) payments designed to ensure that sections 35 and 36 do not result
in a competitive advantage for the Corporation;
(b) payments in the nature of dividends.
(4) A direction under paragraph (2)(c) cannot require the Corporation
to enter into a contract with a particular person.
(5) The Corporation must perform its functions and exercise its powers in
a manner consistent with any directions given by the Minister under this
section.
(6) As soon as practicable after the Minister gives a direction covered by
paragraph (2)(d) or (e), the Minister must cause the direction to be
published.
All courts, judges and persons acting judicially must:
(a) take judicial notice of the imprint of the seal of the Corporation
appearing on a document; and
(b) presume that the document was duly sealed.
The Corporation may, by writing, delegate all or any of its powers or
functions under this Act to:
(a) the Chief Executive; or
(b) a person employed under section 32.
Note: See also subsection 25(3).
At least once every 3 years after the startup time, the Minister must
prepare a report that reviews the need for this Act to continue in
operation.
(1) If:
(a) the operation of this Act would result in the acquisition of property
otherwise than on just terms; and
(b) the acquisition would not be valid, apart from this section, because a
particular person has not been compensated;
the Commonwealth is liable to pay a reasonable amount of compensation to
the person.
(2) If the Commonwealth and the person do not agree on the amount of the
compensation, the person may institute proceedings in the Federal Court of
Australia for the recovery from the Commonwealth of such reasonable amount of
compensation as the Court determines.
(3) The Consolidated Revenue Fund is appropriated for the purposes of this
section.
(4) In this section:
acquisition of property has the same meaning as in paragraph
51(xxxi) of the Constitution.
just terms has the same meaning as in paragraph 51(xxxi) of
the Constitution.
The Governor-General may make regulations prescribing matters:
(a) required or permitted by this Act to be prescribed; or
(b) necessary or convenient to be prescribed for carrying out or giving
effect to this Act.
(283/02)