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Posted on August 28, 2013

Terrorism attacks are the most devastating and expensive of events for terrorism insurance providers and can represent the most disruptive of events for clients. Because of the substantial losses that can be suffered following a terrorism event, and the fact that attacks are becoming a more common occurrence across the globe, some insurers and reinsurers are reluctant to offer terms.

In order to overcome these difficulties, many governments have introduced government terrorism insurance facilities that are also known as terrorism schemes, funds or pools.

Terrorism insurance schemes have become established in a large number of countries and some were mainly created as a result of the events of September 11, 2001.

The information provided in this blog is a general guide only and property owners should obtain appropriate professional advice when arranging and purchasing terrorism insurance for their asset or portfolios in the UK and across Europe.

Below is a very general summary of six of the more prominent schemes in Europe. It should be noted that many terrorism schemes are under regular review and terms and conditions can vary at short notice.

THE NETHERLANDS

Scheme: Nederlandse Herverzekeringsmaatschappij voor Terrorismeschaden N.V. (NHT)

NHT was created in 2003 and established to reinsure those insurance companies including the standard Terrorism clause in their local Property policies. Over 90% of the Dutch insurers have now joined the scheme.

Cover provided: Only relevant to Property in The Netherlands only. Business Interruption cover if the underlying Property policy includes Business Interruption. Cover includes: “Malevolent Contamination” (i.e. the spread of biological, chemical and radioactive diseases). 

Typical Limits Provided:  €75 million per insured per location.

Maximum scheme losses: €1 billion per annum across all lines.

For further information please see: www.terrorismeverzekerd.nl/ 

BELGIUM 

Scheme: Terrorism Re-insurance and Insurance Pool (TRIP)

Cover Provided: Property Damage and Business Interruption in Belgium only. Losses are determined through a committee including insurers and government representatives.

Insurers of All Risks / Named Perils policies are obliged to provide Terrorism coverage for “Simple” Property Risks. Terrorism coverage for “Special Property Risks” (which includes, Industrial Risks, Properties with values above €1,318,794 (index ABEX 665) or above €42,421,19 (index ABEX 665) for dwellings, office buildings, schools, museums, hospitals, universities, libraries) is not mandatory.

Typical Limits Provided:  €75 million per insured per location.

Maximum scheme losses: €1 billion per annum across all lines.

For further information please see: www.tripvzw.be

FRANCE

Scheme: Gestion de L’Assurance et de la Reassurance de Risques Attentats et Actes de Terrorisme (GAREAT).

Cover Provided: The scheme applies to Property and Business Interruption losses arising from commercial, industrial and professional risks where the sum insured exceeds €6 million (Large Risks) and provided that the insurance contract covers for fire damage.

Cover includes risks domiciled in France, French Overseas Departments and Territories (DOMTOM) and Mayotte are covered. All acts of terrorism, including those involving the use of a “dirty bomb” (conventional explosive such as dynamite packaged with radioactive materials) and biological, chemical and nuclear weapons.

Cover is compulsory offered by all members of the French Insurer’s Association (FFSA).

Typical Limits Provided:  GAREAT offers limits as per the applicable Fire/Property policy. 

Maximum scheme losses: Unlimited 

For further information please see: www.gareat.com 

 GERMANY

Scheme: Extremus Versicherung AG 

Cover Provided: Extremus consists of more than 50 German and foreign insurers and effectively acts as an insurer, with risks ceded in turn to its reinsurers. The shareholders (and primary reinsurers) of Extremus comprise of 16 major insurers active in Germany.

German businesses with total values of up to €10 million receive cover automatically under their local Property policy. Businesses with total values between €10 million and €25 million can purchase separate coverage locally rated by each company. Domestic insurers must offer Terrorism cover, but participation in Extremus is not compulsory. Only covers acts of terrorism occurring in Germany.

Typical Limits Provided: Maximum annual aggregate limit of €1.5 billion for each policy or enterprise.

Maximum scheme losses: €10 billion per year.

For further information please see: www.extremus.de

SPAIN

Scheme: Consorcio de Compensacion de Seguros (CCS)

Cover Provided: CCS was formed to manage compensation for victims of the Spanish Civil War and is a government-managed fund that provides compensation for losses that the private reinsurance market will not cover. In Spain, terrorism is one of a number of ‘extraordinary risks’, cover for which is provided through CCS. Therefore CCS is a fund that covers Terrorism risks as part of a handful of other “extraordinary risks”.

CCS also acts as a warranty fund when a private insurer can no longer fulfil its obligations ie as a result of insolvency etc. should the CCS funds be exhausted, an unlimited state warranty will respond.

Cover is in respect of all Property/Business Interruption losses as per the underlying local Property policy, and excludes transport and construction risks. The compulsory nature of coverage is intended to make sure there is sufficient volume of surcharges to build the necessary reserves.

Typical Limits Provided: As per relevant Property policy without sub-limits.

Maximum scheme losses: No maximum limit. 

For further information please see: www.consorseguros.es

UK

Scheme: Pool Re 

Cover Provided: Pool Re provides reinsurance to member insurers (insurance companies and Lloyd’s syndicates), which include Terrorism coverage under their Property policies covering risks in the UK.

Cover applies to Property Damage policies covering risks located in England, Scotland or Wales. Cover is not provided on a standalone basis, neither can the policyholder use the scheme to insure only part of their property portfolio for terrorism. However, it is acceptable to have cover for material damage only, without business interruption.

Typical Limits Provided: As per the relevant Property policy.

Maximum scheme losses: No maximum limit. 

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