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A standalone property terrorism insurance market offers coverage for both TRIPRA-certified and
non-certified risks, and enables companies to tailor capacity to their coverage needs. It is estimated that
there is upwards of US$10bn of terrorism capacity available in the US market. Various factors dictate
how much coverage is available for any single programme, such as whether nuclear, biological, chemical
and radiological cover is sought, although any individual limit is likely to be in the range of US$500m to
US$1bn.

F1C Europe
France
The position regarding insurance contracts is that victims are indemnified for terrorist attacks which
occur in French territory, as are French nationals abroad, via a State Fund. Participation in the French
terrorism reinsurance pool, GAREAT, is compulsory for all members of the French Insurers’ Association
(FFSA), including Lloyd’s. The pool is divided into two sections:

• Large risks section: covers risks where the sum insured is €20m or more.
• Small and medium-sized risks section: covers risks insured below €20m.

Each section is protected by an annual aggregate excess of loss reinsurance mechanism.
GAREAT will cover all acts of terrorism, including those involving the use of nuclear weapons. GAREAT
private reinsurers and French State coverage makes no distinction between nuclear and non-nuclear
attacks. Only contracts with a fire guarantee must cover terrorism. Therefore, GAREAT will no longer
accept risks where there is no fire guarantee.

Activity
In The Netherlands, there is a Dutch Terrorism Reinsurance Company known by the abbreviation ‘NHT’. See what
you can find out about its funding, capacity and maximum exposures.

Germany
Germany’s response to the threat of terrorist losses was to form EXTREMUS Versicherungs-AG at the end
of 2002. Owned by German (re)insurers, EXTREMUS provides commercial property and casualty cover, Reference copy for CII Face to Face Training
especially to small- and medium-sized businesses. The insurer has a maximum annual cover of €10bn.
Although reinsurers provide cover for the first €2.5bn, the final €7.5bn layer is guaranteed by the State.
The default deductible is €50,000 and there is no differentiation of risk, a structure that inevitably has
led to criticism from those who feel they are paying too much. Higher deductibles may be agreed with
the appropriate discount.
The position regarding insurance contracts is that terrorism cover must be included for personal lines
Terrorism cover must
be included for policies and commercial lines policies up to a sum insured of €25m. EXTREMUS provides optional cover
personal lines in excess of €25m, principally for industrial losses arising from terrorism.
policies and
commercial lines There is also a terrorism pool in neighbouring Denmark.
policies
Italy
Despite discussions, no government pool has been formed, leaving the private market to provide cover.
On a general basis, terrorism cover is provided on personal lines and most small to medium enterprise
commercial risks provided the sum insured doesn’t exceed €50m. On the reinsurance side, small
amounts of cover can be purchased routinely with write-backs available to extend protection.

Spain
The government-owned Consorcio de Compensación de Seguros (CCS) provides terrorism cover on both
9 a direct and reinsurance basis for events which occur in Spain. The CCS provides both personal lines and
Chapter commercial property cover in respect of insurance contracts. Following the events of 2001, the CCS

extended the cover to include business interruption losses arising from so-called ‘extraordinary’ risks
such as terrorism.

F1D Australia

The Australian Reinsurance Pool Corporation (ARPC) administers the government’s terrorism insurance
ARPC administers the
government’s scheme. The scheme provides reinsurance cover for terrorism risks relating to commercial property and
terrorism insurance infrastructure and was established following the withdrawal of cover after 9/11.
scheme
ARPC’s cover applies to any act, defined by the government as a ‘designated terrorism incident’, which
occurs in Australia. All eligible insurance contracts are deemed to include terrorism risk cover, effectively
rendering inoperative exclusion clauses. Eligible insurance contracts are those that provide insurance
cover for the loss of, or damage to, eligible property located in Australia.