The German terrorism risk backstop has been given state backing for a further two years
The Federal Ministry of Finance has announced that the state guarantee for the terror insurer Extremus Versicherungs-AG can be extended for a further two years until 31 December 2024. The state guarantee amounts to €5.98 billion per year.
Extremus provides an annual capacity of €2.52 billion for damage caused by terrorism in the case of major risks. It had been due to expire at year-end, creating significant uncertainty for insurance buyers.
“Against the background that the security situation has become increasingly aggravated internationally, the extension of the state guarantee for terrorist risks is an important signal for the stability of the German economy,” says GDV General Manager Jörg Asmussen.
“There is now planning security for the negotiation of new insurance contracts. Now the state and the private sector must use the next 24 months to jointly develop a modern and long-term terrorism insurance solution.”
Late in the day
In 2019, the decision to extend the state guarantee was made very late. “This has led to considerable uncertainty on the part of the policyholder economy, since if this private-sector-state-financed terror protection were to cease, insurance requirements in the context of investment financing could not have been met or could not have been met in good time,” said GVNW chairman Alexander Mahnke.
“With a view to the next two years, no time should be wasted in developing a viable insurance solution that, if possible, also allows for optional extensions in territorial terms and the protection of further systemic risks,” he added.
Holger Loesch, deputy general manager of the Federation of German Industries (BDI), also emphasised the importance of terrorism insurance.
“For many industrial companies, protecting against terrorism risks is an indispensable part of their business activities and their risk management. The extension of the guarantee for the next two years comes late, but still allows the business to be secured,” he said.
“Any future solution must take into account the specifics of terrorism risks. A very careful examination of the options for action is required in order to ensure that the security risks for companies can be controlled in the future as well.”
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