German companies shy away from Terror cover take-up

Reinsurers and brokers that gathered at Baden-Baden last month noted a disappointing take-up in terrorism insurance in Germany. This is in spite of the existence of a state-backed industry pool to cover terrorism risk-EXTREMUS Versicherungs-A.G.-and the availability of adequate capacity in the standalone terrorism market.

"Many industrial firms are going without any terrorism cover, which I think is embarrassing," said Thomas Witting, head of Swiss Re's business for Central, Eastern and Northern Europe. "Terrorism losses are always likely to happen. Companies are insuring themselves against fire, which can be as likely as a terrorism attack, particularly in a certain target areas," he said.

Adrian Clark, managing director at reinsurance broker Benfield Group Ltd. in London noted that EXTREMUS covers only German risks, while large multinational buyers frequently want to buy terrorism cover on a more global basis.

There were expectations that the pool would write more than €300 million in premium income, but so far it has written premium income of about €65 million, said Holger Gaserow, chief executive officer of Aon Re, in Frankfurt, Germany, a unit of Aon Corp. He is concerned that the state might withdraw its backing of the pool within a few years if the government determines there is not enough demand.