Insurers Mulling Terrorism Policies
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FRANKFURT, Germany (AP) _ Allianz, Europe’s No. 2 insurer, said Thursday it was in talks with rivals to form a company that would offer terrorism insurance _ coverage that’s been expensive and hard to get since the Sept. 11 attacks cost the industry billions.
Rainer Hagemann, the head of Allianz’s German insurance arm, told a news conference Thursday that the terror-insurance firm would be based in Luxembourg, and that Allianz was in talks with re-insurer Swiss Re about a possible partnership. Swiss Re as well as Swiss-based Zurich Financial Services confirmed they were in talks with Allianz.
Still, Detlev Bremkamp, a member of the Munich-based Allianz’s management board, cautioned that the discussions were tentative and that ``it is still open whether this will actually happen.″
A Swiss Re spokeswoman, speaking on condition of anonymity, said that a partnership with Allianz was ``one of several solutions Swiss Re is currently discussing.″
Many companies have seen terrorism insurance cancelled in the wake of Sept. 11, or had new restrictions and higher premiums imposed. Insurers say that the attack, which caused damage estimated at up to $90 billion, showed that the potential losses from terrorism were so high and so unpredictable that they could not be insured against.
The Financial Times reported that the new venture would cover only buildings and their contents for European Union companies, and would exclude claims for business interruption, a major part of the Sept. 11 damage figure. Allianz declined to comment on those details.
Bremkamp said that the new company would have the capacity to handle only part of the problem. ``Such a private undertaking could only be a supplement to the involvement of government,″ he said. ``I can envision cooperation between an international private vehicle and solutions with government involvement in individual countries.″
The new insurance venture is only one of the solutions under discussion. Within Germany, the German Insurance Association has proposed setting up a private company that would cover claims up to 3 billion euros ($2.7 billion) for high-risk facilities such as chemical firms and skyscrapers.
Risk above that amount should be covered by the state, the association says. The solution would be similar to government-backed insurance pools for terrorism insurance created in France and Great Britain, it added.
Still, Allianz spokesman Martin Bendrich said that international companies with factories in more than one country needed a solution that crossed boundaries. ``A German solution makes no sense to them,″ he said.
Airlines have been particularly hard hit after the suicide hijackers crashed passenger jets into New York’s World Trade Center and the Pentagon in Washington, and European Union governments have temporarily taken over terrorism cover while a solution is worked out to enable them to continue to fly.