A new insurance company has been set up to insure property against terrorism. Major Swiss insurance and reinsurance groups are involved in the venture.
The company, called Special Risk Insurance and Reinsurance Luxembourg (SRIR), will provide cover for physical loss or damage to property arising directly from acts of terrorism.
The investors believe that SRIR will help address the shortage of terrorism insurance available in the commercial market following the terrorist attacks in the United States.
"The events of September 11th showed losses of an unprecedented magnitude in this area and puts a whole different dimension in the area of terror-related risk," Claudia Stülten, a spokeswoman for Zurich Financial Services, told swissinfo. "But now there is a need for specialist coverage."
SRIR has been jointly set up by Zurich Financial Services, XL Capital, Swiss Re, Hannover Re and Allianz, who each hold stakes of 18.2 per cent, while SCOR holds 9.1 per cent.
"Given the dimension of terror risks, it was only by joining forces with several investors that we could offer this product," Stülten explained. "It was important for the partners to create a separate entity, to operate as a fully independent company in the market place."
SRIR's underwriting teams will be based in Luxembourg and it will be mainly operational in Europe. It will cover commercial and industrial clients for physical loss to insured property, but not life, for a pre-determined coverage amount, limited to €275 million.
"This is the limit that SRIR can offer, taking into consideration the need to control and
limit its own exposure," Stülten explained, acknowledging that this limit may in some cases not be enough - Swiss Re calculated the damage at the World Trade Centers to exceed $7 billion.