In theory, the terror insurer Extremus would have had to pay after the attack – but the financial damage suffered by the insured was below the deductible.
(Photo: Getty Images)
Frankfurt The German insurers advocate an early extension of the state guarantee for terrorism risks. “The federal government must create clarity for the economy on the subject of terrorist risks by September at the latest and extend the state guarantees,” GDV general manager Jörg Asmussen told the Handelsblatt.
The German economy needs planning security when companies renegotiate their insurance contracts for 2023 in autumn. In 2019, the decision to extend the state guarantee was only made in mid-November. This would have unsettled the markets considerably, Asmussen continued.
The General Association of the German Insurance Industry (GDV) thus also supports the demands of BDI as the central association of German industry and GVNW as a lobby for the policyholder economy. The two associations urged the Federal Ministry of Finance (BMF) back in March to quickly extend the state guarantee. Otherwise, it is feared, Extremus would have to shut down business operations in the short term.
In Germany, companies can insure themselves against terrorist risks with Extremus. The specialist insurer was founded after the terrorist attacks on the World Trade Center in New York on September 11, 2001. Shareholders include insurance companies such as Allianz, Munich Re, Swiss Re, HDI Global and Deutsche Rück.
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Extremus covers risks from a total sum insured of 25 million euros. Under this, companies can insure themselves with the German primary insurers.
According to the current guarantee agreement, the state is increasing the total capacity of the specialist insurer with a guarantee from 6.48 billion euros to a total of 9 billion euros. This would allow Extremus to pay out the maximum annual compensation of 1.5 billion euros per customer six times a year. However, the federal government’s commitment from 2019 expires at the end of 2022.
Extension of the state guarantee is not a sure-fire success
With the state guarantee, the federal government wants to protect the German economy from the financial consequences of serious terrorist attacks. In addition, it represents a development aid for a private-sector insurance offer. In the past, the Federal Court of Auditors criticized that these goals had not been achieved. Accordingly, only a few industrial companies use the offer. Not least because of this, the extension is not a sure-fire success.
In a letter to the Federal Ministry of Finance, the associations BDI and GVNW stated that the geopolitical security situation was steadily deteriorating and that the threat from terrorist attacks remained very critical. It is therefore still very important that the German economy can be provided with comprehensive and sufficient insurance protection for property and business interruption risks from a reliable and financially strong partner.
The path of a public-private partnership in insuring the systemic risk of terrorism has not only proven its worth in Germany, adds Asmussen. The risk landscape has changed in recent years. “The dangers have become more global and some have moved to cyberspace,” emphasizes the GDV man. The public-private partnership model must also face up to this development.
The BMF informed the Handelsblatt in early April that it had commissioned a study on Extremus. The report is currently being drawn up and the results will be duly taken into account in the decision. The ministry has so far left unanswered a current inquiry about the status of the report.
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