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XL launches stand-alone terrorism insurance policy

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XL Group P.L.C. has created a stand-alone terrorism insurance policy to address potential gaps in coverage in the federal government's terrorism insurance backstop program.

The policy offers limits of up to $100 million and is sold through XL Group's Stamford, Connecticut-based insurance subsidiaries Indian Harbor Insurance Co. and XL Specialty Insurance Co., XL said Monday in a statement.

The terrorism policy seeks to broaden coverage offered by the Terrorism Risk Insurance Program Reauthorization Act, XL Group said, which expires Dec. 31. TRIPRA, passed in 2007, reauthorized the federal terrorism insurance backstop originally passed in 2002 under the Terrorism Risk Insurance Act.

“Clearly, the demand is increasing in the stand-alone market,” Ben Tucker, XL Group's head of U.S. war, terrorism and political violence underwriting team, said Monday in an interview. “If (TRIPRA) goes away, there needs to be a strong product to replace that. If it becomes more limited, there also needs to be a strong product to replace that.”

Under TRIPRA, a terrorism act must be certified by the U.S. Treasury secretary, secretary of state or attorney general for coverage to kick in, but XL Group's policy does not require certification, Mr. Tucker said.

XL Group's policy provides a broad definition of terrorism, including coverage for political, ideological and religious purposes, and extends coverage to an “act of sabotage” committed against infrastructure to hinder their operation, Mr. Tucker said.

The policy also provides coverage for business and service interruption, extra expenses, loss of rental income and radiological contamination, according to the statement.

XL Group's terrorism policy, Mr. Tucker said, is also recognized by lenders in the commercial real estate construction sector as an alternative to TRIPRA.