NATIONAL TERRORISM RISK INSURANCE PROGRAMMES OF OECD COUNTRIES WITH GOVERNMENT PARTICIPATION MAIN FEATURES

More than two thirds of the 34 OECD Member countries currently rely on the insurance market to manage terrorism risk, as nearly all non-member countries. In a few countries, the private sector has organized a market solution at national level.

In other countries, government participation has been considered as a means of increasing terrorism insurance availability and affordability, support private market operations and enhance market efficiency.

Ten governments of OECD Member countries have chosen to be involved in the financial management of terrorism risk. This table allows a rapid comparison of the main features of these ten national terrorism risk insurance programmes. While they have all designed a unique operational structure to respond to country specific aims and constraints, nine of them have opted for a programme based on a public-private partnership.

National schemes typically involve a layered approach to terrorism risk coverage involving the insured, through a deductible encouraging risk mitigation measures, insurers and reinsurers, possibly through a private risk-sharing agreement such as a co- reinsurance pool, (financial markets), reinsurance, and the government acting as (re)insurer, backstop liquidity provider or guarantor. The private market retention threshold has increased in several countries to reflect (re)insurance market stabilization. Meanwhile, all programs subject to periodical review have been renewed, and new programs have been established in Belgium and Denmark in 2008 and 2010 respectively. This suggests that in the countries concerned, national terrorism insurance programs may not only answer a temporary market failure, but provide a viable and lasting financial response to the terrorism threat.

Flexibility and periodical assessments are recommended as key components of any institutional mechanism to be implemented by OECD member countries, in order to allow them to adapt to risk and market dynamics and to ensure the sustainability of compensation arrangements.

The OECD International Platform on Terrorism Risk Insurance shares information and identifies good practices for the financial management of terrorism risk, to contribute to fast economic recovery in the event of attacks.

This comparative table is regularly updated. It is the product of joint work between national terrorism insurance schemes, the OECD and the World Forum of Catastrophe Programmes. www.oecd.org/daf/fin/insurance/terrorism-risk-insurance.htm Belgium Australia

on system February Constitution Reinsurance the on Act Terrorism Insurance Establishment: Date of Reinsurance Pool) TRIP 3 Renewed in Date of renewal: 2003 Establishment: Date of Corporation Reinsurance ARPC years. 1 1

was Terrorism programme

May April (Terrorism

terrorism - Name

Australian

operational

implemented 2008 2008. 2007

2015

Pool on Pool

of

with 1 The

and 1 and

July

for

act of terrorism. losses arising victims compensation to facilitate Established to capped but a insurance available have terrorism it Government Commonwealth standard cover. offered insurance could be so 2011. of outcome of the Set up

functional economy was

11 that terrorism

had liability

September

ARPC necessary to as Purpose

who at within

a

A

direct

$10

was suffered

felt that from

events The

billion. set up

an for

climate of insecurity the whether to intangible property value destroy partially or completely individuals attempt intended or in groups and performed individually religious ends political, secret threatened Terrorism definition. Criminal Code for full 100.1 of the Australian cause religious or to advance action or which involves Terrorist COUNTRY

public,

. See section Definition of

for ideological,

the

tangible or

at the

ethnic or act threat made as

–

create

or to

a act in impact on ideological economic An

an

– political,

one

lives an

act or

COMPARISON

either

a

of

industrial risks; Commercial fire; accident insurance; compensation liability; motor expenses insurance; assistance and insurance; comprehensive motor car industrial fire risk; insurance against in Belgium; vehicles Belgium Property located in cover interruption business that contain farming construction risks;

life insurance; Coverage .

third

policies workmen’s

registered including insurance;

personal

OF party risk;

legal

TERRORISM

radiological Nuclear risks; (nuclear bombs). atomic by ships; rolling facilities; railway damage to nuclear nuclear energy; Third party liability for crime. products; movers; financial insurance; life insurance; indemnity insurance; professional farming associated with travel; insurance; compensation insurance; insurance; assets; marine Commonwealth resident

weapons with Exclusions

damage caused stock; nucleus

ial insurance;

cyber

prime workers motor loss property;

risks;

RISK

aircraft;

aviation

–

an

INSURANCE

1. Three layers after indexation €700 retention should reinsurance January 2013). 066 by cover of 2. annually (not indexed). market equals retention of for market insurers. The 1. coverage which are: involves The ($10 3. ($ a 2. ( A

retrocession program

2.9 $

Industry Retention Stop loss reinsurance Joint Commonwealth guarantee ARPC TRIP 350

system after indexation

billion)

million (€ Layers billion)

and several

members (€ million) Pool €400 three

primarily

layer the PROGRAMMES

which includes

million funded layers

of €300

The 87

insurance as

not exceed

in excess 6 027 cover

at liabilities

million

576 as of

1st

at 1st

066 risk

027

of

policy) outlined excluded (these nuclear risks and bacteriological chemical, Cover for risks. radiological nuclear cover for There is such cover provides policy original ARPC provided risks are chemical d n a biological Cover for for

Coverage

if the

can NBCR bombs or

no in

by

if . be

the

insurers However, coverage). require insurance policies some mass do so (although but do not option Insurers have the inoperable. exclude terrorism purported clause economy, functional facilitate of the Due reinsurance. commercial or can buy ARPC they terrorism Insurers must offer Compulsion/

to the can use

as reinsurance

Choice

scheme to which of

terrorism use

a

using

cover and

95% any

to have purpose

it.

the

of TRIP

to

is

Retrocession reinsurance/ Non guarantee for free. provides Belgium $3 provides Retrocession Retrocession reinsurance/ Non fees and dividends. receiving commenced Government Australian provided. reinsurance ARPC Coverage? Government Gratuity billion - - State

State hre for charges

government just under the of n 03 the 2013 In

cover state

coverage cover

of

the

Denmark

March operational from the on Act Terrorism Establishment: Date of Non Insurance Pool for TIPNLI 17

was scheme programme - Life Insurance) terrorism Name June

(Terrorism 2010

implemented

Insurance 2008

of

with

31

risks. market failure in NBCR to overcome TIPNLI terrorism. caused by trains; damage to real arising coverage To

provide

was cars and ships Purpose from for

NBCR

insurance established

the losses the

estate;

legislation. definitions in There are no business. of and normal impede authorities in or put COUNTRY a

service or Definition

pressure on

the

running operation

the a

bid COMPARISON

the to

insurance. hospitalisation health insurance; risks). they insurance (when vehicles and rolling interruption; railway contents; business Covers building

cover NBCR Coverage

stock;

OF

hull motor

and

TERRORISM

contract. whichinclude buildings covers Only Exclusions

RISK a

NBCR

INSURANCE

TRIP to the indexation January 2013). been exceeded the come into operation when The (maximum 2. (2016) valued Council) the (own risk non 1. Two 176 027 are less than as 876 027 which exceed should cover any indexed). of 3.

State guarantee Own risk Belgium €300 at 1st January

own risk Terrorism - second layer

life layers: i.e. Layers

. layer reinsured

at

million (not insurance industry the – 066). 066

is DKK The

At

State Guarantee is applied

of DKK

determined by retention

2nd layer.

PROGRAMMES

retention has after €1 present

€700 State excess Insurance 13.73

of The

billion (€1

2013)

will losses cover indexation

15

million (€

billion

in full only this billion). for by

but

the is

NBCR. Yes for

Coverage -

Cover for

NBCR

risks). contracts they terrorism Authority Supervisory the authorisation from obtained insurers Danish non Compulsion/

Danish Financial

provide

Choice who

must have for NBCR cover

–

have life

(if

for protection. government fee is paid to at reinsurance TIPNLI Retrocession reinsurance/ Non (DKK the a billion), retention (DKK current retention. NBCR depend government The exceed layer (should not Reinsurance (valued Stop loss reinsurance 2013). €576 027 in 2013).

charge of

market prices. The Government

state Gratuity price paid Coverage? -

15 State insurer’s

will buy

€876 027 066

insurer at upon there b

coverage illion).

066 Under 0.1

coverage will in excess

the the will

in to

0

return 13.73 of

%

the the

be

for

France

on 1 January 2018. process will occur The next review renewed in 2013. CCR cover was Date of renewal: established The January operational on December established GAREAT Establishment: Date of de CCR AND Actes de Risques Attentats Réassurance l’assurance GAREAT Réassurance

programme

CCR

( terrorism Caisse Centrale Name

2002.

was ( was Terrorisme Gestion de 2001

et in on

des

of 1946. de

28 1 ).

and

la

et

)

large scale events provide September aftermath of estab GAREAT GAREAT. Unlimited Cover to State and provides backed by risks. small and medium unlimited coverage for CCR large risk excess of GAREAT large risks (those unlimited cover for CCR

also provides

lished The Purpose

coverage for

was

provides

section). CCR is

the French

11, in

the to

in

.

The

covered). biological chemical form international) national and terrorism for all French Criminal Code definition in event the of There is no definition COUNTRY a

legislation ‘terrorist act’

(nuclear,

Definition must meet types

and

(regional, risks

of

the

in any

but are

COMPARISON

the in

the

hull and marine transport, private) commercial (industrial, interruption business property Covers all lines of Coverage

other

and

aviation

OF

and

than

hull.

TERRORISM

losses; liability; health Life, terrorism. following looting vandalism, malicious acts and civil commotion; war, and transport by

marine,

accident strikes; riot and Exclusions

insurance;

risks covered or

financial

acts

fraud

aviation theft, RISK and

polices; of

INSURANCE

1. its GAREAT GAREAT members. €380 million is retained by 3. worldwide €4 2. between the reinsured 1. reinsurance and medium structure for There is group of insurance minimum aggregate of in excess there For small and medium Guarantee. up by provided excess of 3. market. provided of 2. to their market share. direct aggregated

€ Unlimited protection € 5 €47 million L € the large risk 5 1.980

imit 335 million 00

i Layers the insurers in proportion s first

unlimited million in annual

a

has

million by

of the insurers. €4 €2

by million in excess different layering

French State

company for

reinsurers

€ is provided

5 .4 and the scheme.

5 PROGRAMMES three

CCR and backed cover: €20 GAREAT sized risk members

00 8

each re of million in excess of 0 m

reinsurance annual insured

in million

million cover

mutualized coverage layers

illion excess

or

by

small

risk

is

in

for by

co

of

-

covered. dirty excluded but weapons are Nuclear radiological. biological, chemical, Yes for

Coverage –

bombs are

Cover for

NBCR

optional. risk medium and small the in Participation FFSA members of companies insurance C of GAREAT large risks aspects since been interruptions has loss and business for direct property Terrorism ompulsory Compulsion/

group sectiongroup

and GEMA compulsory 1986, Choice

coverage

who with

the for

. are

is

Retrocession reinsurance/ Non state guarantee. state cover with providing premium CCR Government

Gratuity Coverage? receives - State

for unlimited

a

of

a

Israel Germany

Property regime under up as The Establishment: Date of Act Israeli according Compensation Fund recent agreement) included in the most two years was the guarantee after reservation to revise subject to when it the October was extended on Federal Date of renewal: November commencing with operations on Establishment: Date of V Extremus ersicherungs 3

.

programme end of system September terrorism Name a Property

permanent guarantee

will be

201 Tax

to the review 2002. 201

was 5

Act

on

of the until

9 -

Set up 1941 Tax

AG

set 1 2002

13

(

.

a

losses occasioned by compensation to purpose Initially Germany companies in reinsurance shareholders Association with its German Insurance initiative insurance. provision help facilitate company Extremus is (terrorism). from extended to property subsequently war

damage and

hostile Purpose

set up

of providing

of set up to of

It

the a

terrorism action

was

being

public

the for the

was an

political or social furtherance of population, in the civili intimidate or coerce with intent to against Israel includes terrorism etc. Hostile action hostility, vengeance motivated by state of deliberately harm that 'damage to hostile action classifies Supreme Court action' a Law Compensation Fund The institution. government government thereby the populat amongst spread that are likely to ideological religious, to achieve or groups of persons committed by Terrorist COUNTRY

definition

population and

Property does not provide is designed to Definition ,

anxiety

ion but Israel and influence any an

acts the damage from ethnic or

political,

purposes

or parts property the of

or -

Tax – hatred,

as

persons acts '

or fear hostile

actions Israeli COMPARISON

and

the

is

of

€140,000. to the limit of propertyvalue, up price 0.3%of of the purchased at the coverage can be Additional €20,000. approximately antiques): jewellery, (not including household Direct damage to damage). mitigating damage unlimited (actual household, property, Direct damage to Coverage +

other than

art and

costs of up the contents

is OF

to

TERRORISM

nuclear, Biological, organisation. non public in education facility; organization; higher maintenance corporation; government corporation; bodies); compensate these separate fund possibility exploring currently legislation (although a No compensation

state budgeted body - profit Exclusions

health stitution or cyber

the

there of chemical,

RISK health

having

- to

attacks.

is

for

INSURANCE a

Two fund). support the compensation were the only funds which the unexpected events. be specific percentage able to compensation fund, was proportion of that each revenue (the paid compensation fund has been After the German Government. 2 reinsurance. including international market 1 - -

€8 €2 changed due to

rate

allocated basis layers: 85% billion provided billion provided Layers

was was

Lebanon

international from year from

PROGRAMMES

15% collected

tax collected towards

of a

tax revenue which

certain

which cover

war

In 2013 with

by by this

was a the

the the

the

NBCR. Yes NBCR. No coverage for for

Coverage –

Cover for

NBCR

amounts. above the additional decide an provided, coverage is A cover provide reinsurer can whereby participation Voluntary

limited level Compulsion/

individual if Choice

to

they terrorism

any

obtain although

threshold coverage

wish.

can

of

Government by the German 2 reinsurance. international market including by the international 1 layers:Two - - Retrocession reinsurance/ Non Compensation Fund. Property made uses the compensation and facilitate taxation to government The Retrocession reinsurance/ Non

€7.5 billion €2.5 billion provided Government

Gratuity Israeli Coverage?

State State

under

distributions Tax

help

provided

the collects

of

Netherlands

Permanent status. Date of renewal: on became May was Establishment: Date of N.V. Terrorismeschaden schappij Herverzekeringsmaat Nederlandse 1

programme

established (NHT) 2003 July terrorism Name

operational

voor 2003. and

of

NHT

in

business continuity of promote NHT September insurance market after interruptions associated with overcome problems The

NHT

sought Purpose

market. was set up to the 11.

to

the to

The

the

otherwise economic interest property loss of death or not, whether resulting impairment whereof intention together in attacks connected attack in the Financieel Toezicht Act Financial Article way acts carried out one outside conduct committed violent Terrorism Centre website. Terrorism as definition mentioned referring Supreme Court in objectives. The Israeli COUNTRY provided

[

of the six Wet op het referred

Definition form

or

/or 3:38 act

the

injury and/or arises Supervision to terrorism a

as

of Research –

impaired. damage to

and/or

series of

the

time and of an

scope on of the any of a terrorism

to in and/or forms of result

health,

the

F.B.I or

in COMPARISON

any of in

the is ]

–

of Israel at for property outside purchase It the (property located in life insurance insurance and non insurance; healthcare Netherlands); must reside insurance (insured include life Lines per calendar billion maximum terrorism preparation conduct in measures or any precautionary contamination or malevolent terrorism, coverage for reinsurance NHT businesses. incorporated not limited Insurance cover value. 0.5%

is possible to

Netherlands).

- will provide

Coverage of coverage 4.5%

per insured

coverage to

sum

funeral

a of

for

OF in

for

the rate

year.

its

the

of

is

TERRORISM

of

€1

-

aircraft liability. aviation hull and No compensation Exclusions

RISK

for

INSURANCE

. s m i a l c reductions paid against need to be pro exceeded **If the Dutch government million aggregate excess of 5 international reinsurers €400 aggregate in excess 4 international reinsurers €300 aggregate in excess 3 insurers) provided aggregate (pooled cover 2 are members of the primary the 1 Five - - €550 – -

€7.5

€50 €300

€100

participating layers Layers

million provided by million provided by

€1 provided by million in the million in annual million providedmillion

insurer

million in the million in the then by

billion :

PROGRAMMES

the

of

- there rated

primary (those

cover

limit franchise

of of

NHT) would the

€950

was

the the who

by

NBCR. Yes for

Coverage –

Cover for

NBCR

are covered by insurance market 95% than compulsory, NHT While compulsory. insurance is terrorism Purchase Compulsion/

of is not 185 Choice joining the

insurers of

not more

the

NHT.

or

Retrocession reinsurance/ Non layer. reinsurers of premium which is equal for their coverage receives The reinsurers. to professional scheme is retroceded €300 million) of the (total €650 million xs The 3rd and 4th layer Government

Gratuity Dutch state Coverage?

State

a

rate paid to

premium

the

to

of

4 the

th

United Kingdom Spain

(revised periodically). Permanent Date of renewal: Act of the after the introduction Establishment: Date of (Pool RE) Company Reinsurance Pool Permanent Date of renewal: legal substantial 1954, permanent status: Establishment with a (provisional status). Background: 1941 Seguros (CCS) Compensacion de Consorcio de

1993. programme

terrorism nature in Name

with Reinsurance

Limited

a change in system regime

of

1991 1993

terrorism insurance for commercial restrictions Established due forces in peacetime). the army a rebellion, actions by riots, civil commotion, made risk (terrorism, meteors), and man windstorm, falling eruption, flood, seaquake, volcanic (earthquake, which include natural extraordinary risks coverage for The CCS provides Spanish Civil War. losses from the market to cope with help the insurance in a provisional way to Originally established interruption. pr to commercial resulting cover for losses primarily provides Ireland). events in Northern (response operty Purpose

Pool RE and from

risk to terrorist nd security

of property

business

UK damage

to

-

control for which the any United Kingdom Government in the violence influencing overthrowing directed carried organisation which connection with any behalf of of persons acting Act it is perpetrated. environment the fear or order or generating established destabilizing with the violent Terrorism COUNTRY

of terrorism social other Definition

insecurity act out

toward the object of of the

or in

government –

committed

by force or activities

political every

the in which

UK

or

British COMPARISON

–

or

has in on

acts

damages Direct material * interruption cover. and business material available for Reinsurance Life and accident * work. equipment and civil electronic breakdown); machinery (theft, plate glass, damage to property railway vehicles; third party liability vehicles ( perils; motor car Fire * abroad) Bodily Injuries (even Interruption Personal lines: Property lines: Damages: & Coverage

natural

damage including –

Business

OF

– is

TERRORISM

);

* losses other thanBI * reactors installations and damage to denial hacking; perils; War assembly construction and insurance; insurance; legal and surety; party liability; space; Marine, Damages Lines:

and related expenses; travel Exclusions

of service; computer cargo;

aviation, covered. virus and

: indirect agricultural

nuclear health; RISK

third credit

INSURANCE

not been used). guarantee CCS above the up to 3 full amount of 2 million annual million wide proportion of amounts (based upon 1 Three layers - - -

Industry retention UK Pool RE has an unlimitedStatean has

aggregate of

100% Layers government per event

fund value. covers up to (to

of the

PROGRAMMES

the

date aggregate). of the

and

industry cover

claims £100 fund. indemnity this

£200 a

the has

NBCR risks. available for Yes coverage is NBCR. Yes for

Coverage -

Cover for

NBCR

selectivity). associated they cover terrorism insurers compulsory. Membership not personal accidents. “coverage”) life and (see column in Propertylines operating in Spain companies policies issued by included allin the compulsorily terrorism) is coverage ( Extraordinary risk Compulsion/

must cover Choice want including

risks

If to

risk (no

all

UK reinsurance retrocession RE Pool Retrocession reinsurance/ Non coverage. a Government Retrocession reinsurance/ Non can). market (although it the portion its of risk to doesn’tCCS cede any (never used). the State guarantee There is no charge for

premium Government government). Gratuity Coverage?

reinsurance State State

does not buy not does

for

(but pays (but

receives or

of

other

United States

December 2020. 2015 through renewed in January program Date Reauthorization Act Insurance Program Terrorism Risk operates under the the Program As of January 2015, Reauthorization Act Insurance Program Terrorism Risk 2007 under the Extension Risk under the extended in Program was Insurance Terrorism Risk 2002 on Originally established Establishment: Date of (TRIP) Insurance Terrorism 26 programme Insurance

terrorism of renewal: under Name . November

was

Act, Act. Risk Terrorism Program

the 2005

of

and in

The

The

. .

in the overcome disruption September in terrorism affordability availability and problems with To

the overcome

market. aftermath of Purpose

insurance 11

of

and to

occurred. of will certify Homeland Security, and Secretary the in consultation Secretary mission US within the resulted The government influence population coerce as violent Act COUNTRY

terrorism part of an effort to airliner, vessel, or

of terrorism Attorney act must have Definition

the act

abroad. in damage

US

of Treasury,

US

committed US US that an act or

policy. has

General

or civilian of

with

COMPARISON

–

to The

a

extent losses but cover for insured TRIA be to see what the necessary

included.

insurance policy

facilitates Coverage

of

cover

to for

OF

would

look at

the

it

TERRORISM

is

insurance, financial insurance, title private mortgage Crop insurance; cover. standard insurance coverage against and cross reference covers insured losses contract the necessary are not excluded Although NBCR peril. farm and officers liability); (except professional liability burglary and theft; c reinsurance, retrocessional reinsuranceor insurance, life insurance, flood insurance, health or medical malpractice guaranty insurance, ommercial

ambit of the

owners multiple Exclusions

for directors as to

TRIA

auto;

RISK look at events

a it

is

INSURANCE

deductible of losses, $120 2016,In CY up 2020. decreases to 80% by CY government share of losses $200 million and the the program increases to aggregate losses to trigger billion. The level of total losses reach above of each insurer’s government this

amount the million

Layers

its deductible until an

insurer must pay

PROGRAMMES will cover of aggregate 20%;

of to the

federal

losses

$100 cover beyond

first

84%

a

contract. an individual on the terms of NBCR depends exclusion of inclusion or insurance). some lines of risks under exclude NBCR possible to Yes (but it is for

Coverage

NBCR

The

state law. as a matter of cover is required which terrorism compensation, for of workers’ with the exception terrorism cover, consumer to adopt company or Optional for a Compulsion/ Choice

reinsurance TRIP does not purchase Retrocession reinsurance/ Non figures are exceeded. uncompensated loss aggregate insurance industry the relevant amounts paid where surcharges for recoupment authority to apply discretionary Secretary retains The Treas Treasury for 2020. calculated by is separately billion in CY 2019 and it reaches $37.5 billion per year until increases by $2 2016, which $31.5 billion in CY does not exceed uncompensated loss industry’s aggregate apply if the insurance recoup Mandatory September 2024. by no later than 30 140% of the outlays policies to recoup surcharges on required to impose of the Treasury is 2020, the Secretary before 30 December loss paid by Treasury payable. If there is a surcharges may be R ecoupment Government Gratuity Coverage? - State ment will

ury or retrocede

of

.