Munich Re says no terror cover without state pools

MONACO (Reuters) - Munich Re MUVGn.DE, the world's second-largest reinsurer, warned on Sunday that it would not offer cover against terror attacks in the United States, France and Germany if state-backed pools are not renewed.

It said the attacks on the World Trade Center in 2001, which cost the insurance industry more than $21 billion, showed just how high claims could be from acts of terrorism, but said there was discussion about whether the existing solutions for covering these risks in these countries should be renewed or changed.

The TREIA pool in the United States and the Extremus pool in Germany are up for renewal this year, while there is discussion about the terms and conditions of the GAREAT terrorism pools in France and also talks in Belgium about whether it should set up similar solution.

Some politicians have argued that as there have been no major incidents in these countries since the September 11 attacks that insurers could once again cover the risk.

But Munich Re’s head of reinsurance made it clear it believed the potential losses from such an attack were too high for the industry to bear.

“In these high-exposure countries our company is only willing to provide capacity if these or similar programs are in place,” Torsten Jeworrek, Munich Re’s head of reinsurance told a news conference at an industry meeting.

“We are not prepared to offer fallback capacity if these structures are not renewed, Jeworrek said.

Reinsurers are meeting their insurance clients to kick off negotiations on the price and terms for annual risk cover contracts they sell them that start at the beginning of 2008.