The re/insurance industry may find itself on the hook from claims arising from the terrorist attacks that hit Brussels on Tuesday morning.
Several terrorist bombs exploded in Brussels airport and in the city’s Metro, killing at least 30 and leaving hundreds injured.
The first attack was a suicide bomb going off at 8am, local time, in Brussels Airport, followed by a second bomb at 9.19am at Maelbeek Metro.
The attacks are likely to hit the international reinsurance market as Belgium has a comprehensive €1.2bn aggregate government-backed terror insurance pool which is supported by the international reinsurance market.
The pool covers both life and non-life losses as well as business interruption cover.
The Belgian Terrorism Reinsurance and Insurance Pool (Trip) is thought to have about 70 members, comprising some 95% of the market operating in Belgium.
The global reinsurance community writes a €587m ($658m) stop-loss protection in excess of an annual aggregate of €300m for Trip.
Trip was established in 2007 after setting up the Terrorism Act, which stipulates the maximum amount available to cover all events classed as "acts of terrorism" during a calendar year as €1bn (on an annual aggregate basis).
This figure was linked to the consumer price index and as at January 1, 2014 stood at €1.18bn, which was an increase of 1% on the amount for 2013 and of 19% on the base amount detailed in the Terrorism Act.
Trip’s system to protect insurers has three-layers. The first layer makes provisions for joint and several indemnity amongst the pool’s members in respect to claims. This indemnity will not to exceed €300m annually, so an insurer’s retention is €300m.
The second layer provides stop-loss reinsurance cover of €400m funded by Trip members, (€587.4m for 2014 following index-linking, applied fully to the layer reinsured by Trip), so for example a reinsurance layer excess of retention up to €700m, indexed.
A third layer offers €300m of surety from the Belgian state, so a state layer excess of €700m up to €1bn, indexed.
The Trip scheme covers property located in Belgium; vehicles registered in Belgium; industrial fire risks; motor car comprehensive insurance; assistance and legal expenses; workers' compensation; motor third party liability; fire (simple risks); life insurance; personal accident; and health and hospitalisation.
Jeremy Eastman, intelligence manager at Red24, said that an attack of this sorts was expected by authorities.
“There has been a heightened threat that there would be an attack in Belgium. Following the Paris attacks and as the main suspect was thought to be in Belgium,” he told Reactions.
“There was a lot of suspected terror activity in Brussels in the last few weeks. The police were very vigilant… a lot of threats were stopped. It was a threat that was likely to happen,” said Eastman.
He advised that any company with business or operations in the area should minimise activity and employees should not be leaving the buildings.
“We hope this is the end of this spate of attacks. Hopefully this is the end of the attacks in Brussels today,” said Eastman.
“From an insurance perspective, this is likely to hit travel insurance. At the moment the whole travel system has been shut down. There will be lots of claims from that as people cannot get to where they need to be.
“There will also be lots of business interruption claims. Germany the UK and France, again, face high threats of terror attacks. Most of mainland Europe could be potential targets,” he said.
Only four days ago, the Belgian police arrested Salah Abdeslam in the city in what has been called one of the world’s biggest manhunts.
He is a Belgian-national suspected to have carried out some of the Paris terror attacks last year.
The Brussels public transport system is currently suspended and Eurostar has now cancelled services into and out of the city.