German government close to terrorism coverage solution, says news source

A German newspaper, “Handelsblatt”, is reporting that country’s government is close to signing a solution for terrorism coverage. The German government has been negotiating with insurers and industrial representatives to find a compromise following the withdrawal of terrorism reinsurance since September 11, 2001.In this case, insurers, through a pool arrangement, would offer cover up to 3 billion Euros (Cdn$4.2 billion), with the state taking on some level of the remaining coverage. The level of that coverage has thus far been the sticking point, reports the German paper. But there seems to be agreement on the government accepting excess risk of 10 billion Euros (Cdn$14 billion), Handelsblatt says.However, the paper notes that there still appears to be some disagreement on third-party war risk liability for airlines.In North America, governments have yet to act on the terrorism reinsurance issue. At last week’s annual conference of the Risk and Insurance Management Society (RIMS), president David Mair expressed optimism that a U.S. solution was close at hand. This follows meetings between President George W. Bush and RIMS, as well as other representatives of the insurance and industrial sectors. President Bush came out of those meetings urging the Senate to pass legislation to provide a terrorism backstop.Mair added that the Canadian government has indicated it will not move forward until a U.S. decision is reached. “You will see us (RIMS’ lobbyists) in Ottawa very soon,” he noted.Both Canada and the U.S. are also stalled on the issue of airline war risk coverage, having extended government-backed coverage into the spring, with no permanent solution in sight. Airlines on an international level have proposed forming their own insurance company to find backing for the coverage, and have one large brokerage firm looking into this possibility on their behalf. Canadian Transport Minister David Collonette has also raised the possibility of the government setting up a permanent system of coverage for the airlines in this country. The Canadian airlines’ current coverage expires on May 20.