Terrorism risk coverage in the post-9/11 era: A comparison of new public-private partnerships in France, Germany and the U.S

Abstract

The paper discusses the development and operation of terrorism insurance programmes established in France, Germany and the U.S as reaction to 9/11. These three programmes are all based upon a public-private partnership with government backup. However, there are some fundamental differences regarding issues such as exclusions, price differentiation, risk mutualization, current level of terrorism insurance demand and the government exit strategy. In particular, significant differences of prices and degree of market penetration in the three countries have been observed and we discuss some factors that could contribute to this. Recent changes in the nature of international terrorism worldwide indicate that these issues will remain in our future. Hence, we think that government and industry would at the very least benefit from better understanding of how others operate abroad. © 2005 The International Association for the Study of Insurance Economics.