Following Friday’s announcement that Germany’s Allianz will lead a group offering airlines up to $2 bi
llion in coverage per annum (See IJ Website April 26), Chancellor Schroeder’s government announced that it would commit an additional €10 billion ($9 billion) to cover damages to buildings and other property resulting from terrorist attacks.
Following Sept. 11 it had already committed € 3 billion (2.7 billion) in coverage as an emergency measure. The new plan calls for the two insurance funds to extend over a three year period, when they will be reviewed. I
t covers only property damage, excluding business interruption and liability claims, and doesn’t cover damages or liabilities related to airlines.
The scheme is similar to the insurance pool in place in the U.K. since the early ’90’s which was adopted following a series of IRA bombings. Under the plan private insurers would assume primary coverage, including claims resulting from terrorist related attacks. If the claims from any one event, or the total for the year exceed € 3 billion ($2.7 billion) the government will cover that excess.
It will charge a premium in line with the industry for its contribution. Although the exact amount hasn’t been agreed on yet, reports indicate it will be based on more or less “a market-typical premium.”
The government’s commitment was approved by all involved in the negotiations, especially the insurance community, large contractors and commercial property owners, many of whom have been unable to obtain terrorist coverage, or have seen their premiums rise out of sight since Sept. 11.
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