FAQs Insurance against terrorism

Transcription

1 FAQs Insurance against terrorism

2 eservices Information sheet FAQs Insurance against terrorism Contents Terrorism coverage How is terrorism defined? 2 What kinds of insurance cover claims caused by terrorism? 2 Does my travel insurance cover terrorism? 2 Am I insured against terrorism when I take the train or metro? 2 When I suffer injury or damage as a result of terrorism, but I don t have any insurance policy that will reimburse this, will I not receive any compensation for my claim at all? 2 Terrorism is not mentioned anywhere in the general terms and conditions. Am I covered for terrorism? 2 Could some claims still be excluded under the terrorism cover? 2 The law only applies to Belgian risks. What are Belgian risks? 3 I have suffered injury or damage as a result of terrorism during a holiday or business trip abroad. Am I insured for this? 3 Important Is the continuity of TRIP coverage guaranteed in the event of a company acquisition/merger? 3 Cover of up to EUR 1.2 billion I read that there is a EUR 1 billion limit to cover for claims arising from terrorism. Is that right? 4 Which insurers are members of the non-profit organisation TRIP? 4 My insurer is not on the list of members of the non-profit organisation TRIP. What does that mean? 4 Why can insurance companies decide for themselves whether or not to sign up to the non-profit organisation TRIP? 4 What is the non-profit organisation TRIP? 4 Why is terrorism cover limited to members of the non-profit organisation TRIP? 4 How was the available amount determined? 4 Establishing payment amounts (if insurer is a member of the non-profit organisation TRIP) What is a payment percentage? 5 How is the payment percentage defined? 5 What happens if the total level of claims comes to less than EUR 1.2 billion in a calendar year? 5 What happens if the total level of claims comes to more than EUR 1.2 billion in a calendar year? 5 Can a payment percentage be changed? 5 When does the payment percentage become definitive? 5 Do some claims have priority for compensation? 6 Can my insurer pay out more than the amount they have to pay according to the payment percentage? 6 Can my insurer pay out less than the amount they have to pay according to the payment percentage? 6 I have invested my savings in a life insurance policy or investment insurance policy. If the payment percentage does not result in full compensation, does that mean I lose my savings? 6 Is it true that the payment percentage does not apply to accident-at-work insurance? 6 How long can it take for entitled claimants to receive their (share of the) compensation? 6 Further questions Who will pay me the compensation? 6 Who should I contact if I have a claim as a result of terrorism? 6 How are the claims processed? 6 What is the Committee? 7 Where can I find the law which the regulations on terrorism for insurance policies are based on?

3 Terrorism coverage How is terrorism defined? Terrorism is defined as: a clandestine organised action or threat to carry out an action for ideological, political, ethnic or religious purposes, performed by an individual or group, where violence is perpetrated against people, or the economic value of material or intangible goods is fully or partially destroyed, or where the intention is to scare on the public, create a climate of insecurity or put pressure on the authorities, or to disrupt traffic or the normal functioning of a service or company. To determine whether a given event matches this definition, a Committee is put together made up of representatives from the government and from the insurance sector. What kinds of insurance cover claims caused by terrorism? The following forms of insurance must offer cover for claims arising from terrorism. work-related accident insurance; civil liability motor vehicle insurance (civil liability only, not full-risk insurance); civil liability insurance for fire and explosions for institutions which are generally accessible to the public; common risk fire insurance (e.g. for homes) accident insurance; sickness insurance; life insurance. For all other forms of insurance, claims resulting from terrorism are covered unless the insurer has explicitly excluded this coverage under the general terms and conditions of the insurance policy. Does my travel insurance cover terrorism? It is not mandatory for travel insurance policies to include cover for claims resulting from terrorism. If your policy s general terms and conditions do not include an explicit exclusion of terrorism, then you are indeed covered for terrorism. Am I insured against terrorism when I take the train or metro? There are different forms of insurance which offer cover for terrorism in such a situation, such as hospitalisation insurance, life insurance and accident-at-work insurance. When I suffer injury or damage as a result of terrorism, but I don t have any insurance policy that will reimburse this, will I not receive any compensation at all? Victims of deliberate acts of violence are eligible for compensation from the Fund to assist victims of deliberate violent crimes, if they do not receive compensation from the perpetrator or an insurer. This also applies to the victims of terrorism. In principle, the amount of compensation that the Fund can pay is limited to EUR 62,000. The government can in fact increase the compensation for victims of terrorism and simplify the procedure for receiving this compensation, by issuing a Royal Decree. Terrorism is not mentioned anywhere in the general terms and conditions. Am I covered for terrorism? Yes The only time you are not covered for terrorism is when it is explicitly mentioned as an exclusion under the general terms and conditions of your insurance policy, and it is not mandatory for this form of insurance to include cover for acts of terrorism. Could some claims still be excluded under the terrorism cover? Insurers can exclude injury or damage caused by nuclear weapons from their terrorism cover. This must be explicitly listed as an exclusion under the policy s general terms and conditions. Insurers can also list other exclusions, but only for insurance policies where cover for acts of terrorism is not mandatory. 2

4 The law only applies to Belgian risks. What are Belgian risks? This depends on the type of insurance: If the insurance is for a property, or a property and its contents where these two elements are covered by the same insurance contract, then the property must be located in Belgium. If the insurance is for a vehicle or vessel of any kind, then the vehicle or vessel must be registered in Belgium. It does not matter for this cover whether the vehicle or vessel was in Belgium at the time of the event. If the insurance policy is applicable for a duration of four months or less and is intended to cover risks during a trip or holiday, of whatever type, then the policyholder must have taken out the contract in Belgium. It does not matter for this cover whether the policyholder was also in Belgium at the time of the event. In all other cases, the policyholder must have their regular domicile in Belgium. If the policy holder is a legal entity, then the registered office of the legal entity insured under this contract must be located in Belgium. I have suffered injury or damage as a result of terrorism during a holiday or business trip abroad. Am I insured for this? Insurance contracts cover Belgian risks. Whether the claim itself arose in Belgium or abroad is immaterial: the insurer will compensate the claim. Important Is the continuity of TRIP coverage guaranteed in the event of a company acquisition/merger? The answer is yes, as long as the following conditions are strictly respected. Article 10 of the TRIP statutes offers the company making the acquisition, or the new merged entity which is not a member of TRIP, the option of invoking the continuity of TRIP coverage on the condition that TRIP has received the request for membership at the latest by the date of publication of its licencing in the Belgian national gazette or, in the case of a company which is free to provide services in Belgium, on the date of publication of the company name on the NBB (National Bank of Belgium) website. Article 10 of the statutes also states that - for admission during the course of a year - the request for TRIP membership must be submitted during the month of publication of licencing, and the admission can only become effective from the date on which TRIP received the membership request. If a company wants to ensure the continuity of TRIP coverage, it must take care to submit a membership request to TRIP before the publication of registration by the NBB, with the condition precedent that it receives a licence, so that the start date for TRIP membership is the same date as the receipt (publication) of the licence to operate as an insurer in Belgium. Please find below a summary table showing all possible scenarios, and the solutions that apply for each one. Acquisition Acquiring company Acquired company Member Member No problem > continuity Member Not a member No problem > continuity, the acquired company s cases are covered. Not a member Member If the acquiring company operates in Belgium, must meet the deadlines that apply for new members If the acquiring company does not operate in Belgium, option of becoming a member immediately Not a member Not a member Application necessary: respect the deadlines that apply to new members Merger A B Member Member submit request within one month of approval by the NBB Member Not a member submit request within one month of approval by the NBB Not a member Not a member submit request within one month of approval by the NBB Merger: continuity for 1 of the 2 companies See acquisition 3

5 Cover of up to EUR 1.2 billion I read that there is a EUR 1 billion limit to cover for claims arising from terrorism. Is that right? The combined commitments of all insurers on the list of members of the non-profit association TRIP total EUR 1 billion per calendar year. This means that under the law dated 1 April 2007, the insurers on the list, together with the reinsurers and the government, will not pay out more than EUR 1 billion for all events recognised as acts of terrorism that occur in any one calendar year. This amount is indexed annually, and as of 1 January 2016, amounted to a little over EUR 1.2 billion. Which insurers are members of the non-profit organisation TRIP? Almost all insurers who operate in Belgium are members of TRIP. Check this list to find out whether your insurer is also a member of TRIP. My insurer is not on the list of members of the non-profit organisation TRIP. What does that mean? If your insurer does not appear on the list of TRIP members, then it does not benefit from the overall limit to cover of EUR 1.2 billion, nor from the associated shared funding system between insurers. In practice, this means that if you make a claim as a result of terrorism, your insurer will have to compensate you according to the conditions of your insurance contract. Why can insurance companies decide for themselves whether or not to sign up to the non-profit organisation TRIP? Belgium upholds the principle of freedom of association. This means that no one can be forced to join an association. This means that insurance companies cannot be obliged to sign up to the non-profit organisation TRIP. Nonetheless, most insurance companies have indeed decided to sign up. What is the non-profit organisation TRIP? The non-profit organisation TRIP (Terrorism Reinsurance and Insurance Pool) was founded jointly by Assuralia and a number of insurance companies. The members of the non-profit organisation are the insurance companies shown on the list, reinsurance companies and the Belgian Guarantee Fund. The combined amount of compensation which all members of the non-profit organisation can pay out in cases of terrorism is limited to EUR 1.2 billion per calendar year. This means that in principle the insurance companies which are members of TRIP should not pay out more than a combined amount of EUR 1.2 billion. The non-profit association TRIP creates a joint funding system between its members: the compensation that members have to pay out is spread across all the members. Why is terrorism cover limited to members of the non-profit organisation TRIP? Since the terrorist attacks in New York on 11 September 2001, it has become clear that terrorism can have major unforeseen consequences. First and foremost, obviously, for the victims and their families and friends. But significant economic damage can also be caused. The claims fall largely on the insurers. No one knows how many terrorist acts will be carried out, nor the extent of their consequences. Insurers therefore are running a major financial risk by offering cover against terrorism. Insurers can only continue to offer cover by bearing the risk jointly, and also by setting a maximum amount payable. How was the available amount determined? Insurers, reinsurers and the government contribute to this amount. Reinsurers cover the risks of insurance companies in return for a premium payment. This amount is based on the amount that insurers can contribute on an annual basis without endangering the survival of the company. In 2016, insurers and reinsurers pooled EUR 900 million for all claims resulting from acts of terrorism during this calendar year. The remaining EUR 300 million is provided by the government. 4

6 Establishing payment amounts (if insurer is a member of the non-profit organisation TRIP) What is a payment percentage? The participating insurers, reinsurers and the government have jointly pledged a maximum of EUR 1.2 billion (in 2016) per year for compensation of claims arising from terrorism. This amount is a maximum, therefore no more than this can be paid out. If the total amount from all claims adds up to more than EUR 1.2 billion, then this amount will be shared out among all those with valid claims. This is based on a payment percentage. It means that all entitled claimants will receive an equal percentage of compensation for their claims. Example: during the same year, one or more attacks take place, resulting in a total of EUR 1.6 billion in claims being submitted. But only a maximum of EUR 1.2 billion is available. Each person who has suffered injury or damage is therefore entitled to 75% (1.2/1.6) compensation. How is the payment percentage defined? The non-profit organisation TRIP adds up the amounts of all the claims submitted and expected. This information is passed to a Committee which determines whether the maximum available amount is sufficient to compensate all of the claims. The Committee may expect the total amount resulting from the number of claims to be higher than the maximum available amount, or find it does not have sufficient information to determine whether or not the maximum available amount will be sufficient. In these cases, the Committee will propose a (provisional) payment percentage. What happens if the total level of claims comes to less than EUR 1.2 billion in a calendar year? If the total amount of claims resulting from one or more terrorist attacks during one calendar year is less than EUR 1.2 billion, then all claims can be paid out in full. You are then fully entitled to the same amount you would receive for other claims that were not caused by terrorism. If it is unclear whether more claims could be submitted, or if there is a real danger of more attacks during the same calendar, the payment percentage will initially be set as less than 100%. If the total amount later proves to be below EUR 1.2 billion and can therefore be covered in full, the payment percentage is increased to 100% and the insurers will make a supplementary payment. What happens if the total level of claims comes to more than EUR 1.2 billion in a calendar year? If the total volume of claims expected is more than EUR 1.2 billion, the payment will be lower than the amount you would normally be entitled to under the terms of your contract. Once the payment percentage has been set, insurers will make payments on the basis of that percentage. People with valid claims will therefore not receive compensation in full for their claims. Can a payment percentage be changed? The payment percentage will be set by the Committee within six months of the act of terrorism. This Committee must meet at least every six months to decide whether or not to revise the payment percentage. If there prove to be less claims than initially expected, the payment percentage will be increased. This will lead to an increase in compensation for all claims resulting from the act of terrorism. In the event that the insurer has already made one compensation payment, a second payment will be made. If there prove to be more claims than initially expected, the payment percentage will be reduced. This results in a lower compensation payment, but does not affect compensation which has already been paid out. Compensation cannot be reclaimed. If the insurer has not yet paid the compensation, but has already informed the entitled claimant of their intention to pay them a certain amount, then the insurer will have to apply to first (higher) payment percentage. The second (lower) payment percentage therefore only applies for valid claimants who have not yet received their compensation, and have not been informed of any decision by their insurer. When does the payment percentage become definitive? The definitive payment percentage must be set by the Committee at the latest on 31 December of the third year following the year of the act of terrorism. Example: For the attacks in Zaventem and Brussels on 22 March 2016, the definitive payment percentage will be set at the latest by 31 December

7 Do some claims have priority for compensation? Yes, but only if the Committee determines that the amount of EUR 1.2 billion is insufficient to compensate all claims, or if the Committee does not have sufficient information to make a decision. Deaths and bodily injuries are prioritised for compensation, followed by material damage and finally non-material damage. Can my insurer pay out more than the amount they have to pay according to the payment percentage? Your insurer can voluntarily decide to pay out more, but is not obliged to do so. Any extra amount paid out by your insurer does not form part of his contribution to the solidarity system under the non-profit association TRIP. Can my insurer pay out less than the amount they have to pay according to the payment percentage? No. There is one specific exception to this. The amount of compensation for claims is limited to EUR 75 million for insurance contracts covering damage to property and/or contents, or consequential losses resulting from damage to property and/or its contents. This limit applies per policyholder, for each insured location and year, regardless of the number of insurance contracts. This exception does not apply to residential buildings. In these cases the insurer must provide compensation in accordance with the payment percentage. I have invested my savings in a life insurance policy or investment insurance policy. If the payment percentage does not result in full compensation, does that mean I lose my savings? No, your insurer must always pay you the full balance you have already accumulated, i.e. the theoretical surrender value. The payment percentage is not applied to this. The payment percentage only applies to the risk capital, i.e. the difference between the capital paid out in case of death and the theoretical surrender value. Is it true that the payment percentage does not apply to accident-at-work insurance? Yes Accident-at-work insurers shall compensate claims from valid claimants without any specific limitations. Any amount that the insurer pays over and above the payment percentage he will credited by the Fund for Occupational Accidents. How long can it take for entitled claimants to receive their (share of the) compensation? The Committee will set a payment percentage as swiftly as possible after a terrorist act has occurred. Once the payment percentage is set, the first compensation payments can be made. Afterwards, the Committee must discuss whether or not to revise the payment percentage at least once every six months. The definitive payment percentage must be set at the latest on 31 December of the third year following the year of the act of terrorism. Further questions Who will pay me the compensation? Your own insurer will issue the payments. You do not need to contact TRIP yourself. Who should I contact if I have a claim as a result of terrorism? Please contact your insurance agent or your own insurer. How are the claims processed? If you suffer injury or damages as a result of an act of terrorism, please inform your insurance agent or your insurer as soon as possible. Your insurer will forward your claim to the TRIP non-profit association. 6

8 What is the Committee? The Committee is made up of several government representatives and two representatives of the TRIP non-profit association. The Committee s tasks are as follows: to decide whether or not an event should be treated as an act of terrorism; to set the payment percentage. Where can I find the law which the regulations on terrorism for insurance policies are based on? You can read the law by clicking on this link. Responsible editor: Pedro Matthynssens Vanbreda Risk & Benefits NV Plantin en Moretuslei 297, 2140 Antwerp, Belgium Antwerp Trade Reg., Antwerpen division VAT number BE FSMA A-R