At least two countries — the Netherlands and Spain — have terrorism risk insurance systems that protect life insurers.
The Dutch system also protects health insurers.
Officials at the U.S. Government Accountability Office (GAO) have published descriptions of the Dutch terrorism risk insurance system, the Spanish system, and other countries’ systems in a report on 15 non-U.S. terrorism insurance systems.
The GAO developed the report to carry out a provision in the Terrorism Risk Insurance Program Reauthorization Act of 2015. The 2015 TRIA reauthorization requires the GAO to look at how other countries structure and fund their terrorism risk insurance systems.
In the United States, the system created by TRIA uses a federal program with up to $100 billion in annual funding to backstop the coverage written by private insurers.
The U.S. program protects issuers of property insurance and workers’ compensation insurance. But it does not shelter life insurers or issuers of health and disability insurance coverage unrelated to occupational risk.
In New York City, for example, TRIA protects the ability of insurers to cover the new World Trade Center Transportation Hub. TRIA does not protect insurers’ ability to pay death claims, medical bills or disability benefits for the tens of thousands of passengers who move through the hub every day.
In the Netherlands, the terrorism risk system provides the equivalent of only $61 million in government backstop support, but the Nederlandse Herverzekeringsmaatschappij voor Terrorismeschaden N.V., an insurance company consortium, has promised to provide the equivalent of up to $1.2 billion in reinsurance protection for the members.
The consortium was set up in 2003 by Stichting NHT, an organization formed by the Dutch Association of Insurers.
The Dutch fund covers issuers of health insurance, life insurance and funeral insurance as well as issuers of property-casualty insurance.
Spain has an entirely government-run system, the Consorcio de Compensación de Seguros. That system, which was set up in 1954, is entirely government-run. The Spanish system promises to provide an unlimited amount of funding to protect issuers of both life insurance and property-casualty lines — including business interruption insurance — that are affected by terrorism, natural disasters or other catastrophic events.
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