Denmark to offer bioattack insurance

A measure adopted by Denmark has been authorized by the European Commission under EU state aid rules to provide a state guarantee on non-life insurance against damages resulting from biological, chemical, nuclear or radioactive terrorist attacks exceeding a certain threshold.

The European Commission approved the measure under Article 107 3 (c) of the Treaty on the Functioning of the European Union, noting that the measure provided an appropriate means to ensure that insurance coverage against terror risks was available.

The Treaty on the Functioning of the European Union allows, under certain conditions, aid to provide for the development of certain economic activities. The measure, meant to be self-funding, concerns insurance coverage that is currently insufficiently available on the private market.

"Today's decision shows that the Commission and Member States can work together on important public policy goals," Penki News reported. "The decision will ensure that insurance coverage against certain terrorist risks is available on the Danish market, while at the same time ensuring that state aid and Single Market rules are respected."

Denmark will introduce a state guarantee to ensure that the insurance coverage is available. Under the new plan, insurers providing coverage against terror attacks will be liable to a pre-determined threshold for non-life damages. Any risk retained by the insurance industry will be based on their capital base and the availability of terror reinsurance on the global market.

The threshold currently is set at DKK 5 billion with the Danish state providing a guarantee for the next DKK 15 billion on losses exceed that threshold.

A fee for this guarantee will be paid by the insurers. This fee, set at 0.15% of the guarantee amount, is variable according to the threshold's level. Denmark will recover this payout over time from a levy in the event of a payout on the guarantee.