Parisian businesses struggling after the Nov. 13 attacks are likely to be able to make successful insurance claims, helped by a state-backed fund set up in the wake of the Sept. 11 2001 attacks in New York. The carnage in Paris could spur demand for insurance against terrorism, as French hotels, department stores, and sports and concert venues face cancellations and fewer customers. Those shops and restaurants in the areas cordoned off by police for investigations are expected to be affected the most.
However, the Gareat co-reinsurance pool, set up in 2002, which is provided with unlimited state-guaranteed cover through the CCR (Caisse Centrale de Reassurance) fund, will help insurers pay claims from businesses.
This pool structure, pioneered by Britain's Pool Re in 1993 and common in developed markets, acts as a reinsurer, sharing the insurers' burden in protecting business against terrorism. This makes terrorism insurance more affordable for businesses. Insurers will be liable for the first 400 million euros of all claims combined, Gareat will pay out on claims between 400 million and 2.4 billion, with the French government taking up the rest via the CCR fund, according to 2015 data. Gareat and CCR were not available for comment. The cost of damages will not fall to the state in the case of these attacks, however, industry sources said, as the costs will not reach anywhere near 2.4 billion euros. One expert predicted claims were not likely to top one billion euros.
The Gareat members are French or foreign insurance companies which issue property damage policies covering risks in France, including terrorism. Although businesses do not have to buy business interruption insurance, which covers against operating losses, most small and medium-sized companies buy property damage and business interruption as a package, an industry source said. In addition, about 15 shops and small businesses directly affected by the Paris attacks may together receive 600,000 euros of aid, under a proposal from the mayor of Paris. The payouts are separate from those to be made to individuals linked to the victims of the attacks from France's compensation fund.
Large venues such as concert halls and stadiums which cancelled events as a result of the attacks will be able to claim on cancellation insurance, provided their policies contain a terrorism clause, which industry specialists said was likely.