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Belgium: Terrorism Risk Insurance

(July 2, 2008) The Belgian Law of April 1, 2007, on insurance against damages caused by terrorism went into effect on May 1, 2008. It applies to insurance of terrorism risks in Belgium. It was already mandatory for insurers to include terrorism coverage in certain types of insurance contracts, including workers' compensation, motor vehicle liability, liability for fire or explosion in buildings accessible to the public, and simple fires. The new Law extends the requirement to accident, health, and life insurance. The new regime, however, is not applicable to the following types of insurance: property and liability insurance of nuclear plants, railway trains, aircraft, and ships, and contracts covering only terrorism.

Article 2 of the Law defines terrorism for the purpose of compensation as:

A clandestinely organized action or threat of action for ideological, political, ethnic or religious purposes, carried out by an individual or a group and perpetrated on individuals or destroying wholly or partially the economic value of goods, either to impress the public, to create a climate of insecurity, or to pressure the authorities or to hinder the movement or normal functioning of a service or enterprise.

A committee comprised of representatives of various ministries and insurers decides whether an event meets this definition.

The Law creates a new legal entity, the Terrorism Reinsurance & Insurance Pool (TRIP) and spreads the risks between the state and the insurance industry. Coverage will be available up to €1 billion (about US$1.6 billion). This figure will be adjusted annually in line with the Consumer Price Index. Participating insurers in the Pool will pay the first €700 million (about US$1.1 billion), with the state paying the reminder. (Loi relative à l'assurance contre les dommages causés par le terrorisme, Apr.1, 2007, MONITEUR BELGE [Belgium's Official Gazette], May 15, 2007, available at