Damages, Civil Liability & Standalone Terrorism – Political Violence: Strategic Complementarity in France and Internationally

The numbers speak for themselves.

The 500 senior risk managers of multinational companies interviewed as part of the study Howden Stepping up - Political risk insurance in a volatile world have identified issues related to:

• currency conversion (40%)
• property rights (40%)
• acts of political violence (33%)
• failure to comply with an arbitral award by a foreign government (25%)
• refusal of a foreign government to allow the company to regain possession of equipment or stocks (18%)
• damages resulting from wars, terrorist acts, or political violence (17%)

And not without reason. According to the study Political Risk Outlook to the horizon 2030,

• The risk of political violence has increased in 136 countries over the past years
• 50 countries have experienced a statistically significant degradation
• The number of countries exposed to active or latent conflicts is continuously rising since 2021
• Civil unrest (strikes, riots, low-intensity political violence) is on the rise, including in Europe

Not surprisingly, the Future Risks Report 2025 (AXA) confirms that, while climate risk remains in 2025 the main concern of global leaders, in Europe - and more particularly in France - geopolitical risk surpasses climate-related concerns for the first time.

Why traditional fonts are no longer sufficient

The Property Damage and Business Interruption and Liability Insurance (RC) remain essential pillars to protect assets and third parties. But faced with the complexity of current risks, their limitations clearly appear. Here's why:

• Material damages
  Companies can suffer major material damages following acts of terrorism, riots, local insurrections, or even acts of war. However, traditional damage policies may exclude certain risks, limit compensation, or condition coverage on restrictive definitions.
• Operating losses and rental
  Income losses can result in significant losses (clearing, decontamination, reconstruction, supply difficulties, decrease in attendance, etc.) Beyond material damage, the shutdown or disruption of activity can lead to considerable losses. The problem is that most policies require guaranteed material damage to trigger coverage of operating losses. Consequences: - Access to the site is only covered if it results from guaranteed material damage (including in the neighborhood). - A simple decrease in demand or attendance is not compensated, unless the policy provides for a specific extension (e.g. "loss of attractiveness") and if the generating event is covered.
• Civil Liability (RC)
  In RC, acts of terrorism or political violence are often excluded, limited, or conditioned, especially in the absence of fault on the part of the insured. Third party claims (customers, neighbors, landlords) may therefore remain without recourse if the clause is not specifically drafted.

Areas of non-coverage can be costly in case of a crisis.

France vs International: very different regimes

In France, property damage resulting from acts of terrorism is automatically covered under Articles L126 1 to L126 3 of the Insurance Code. Terrorism coverage is therefore automatically included in Property Damage contracts.

To assume this exceptional risk, insurers transfer a portion of their exposure to GAREAT (Management of Insurance and Reinsurance Risks of Terrorism and Acts of Terrorism), a mutualized mechanism backed by the CCR (Central Reinsurance Fund), which provides - on behalf of the state - unlimited coverage as a last resort.
But be careful:

• Strikes, riots, and popular uprisings (SRCC) are not covered by GAREAT. They may be covered in a more or less limited way by certain police damages, and vary greatly depending on the companies according to activity and location.
• Insurrections, revolutions, coups d'état, or wars are expressly excluded under the Insurance Code.
• Access, attraction, and certain extensions of business interruption losses without direct damage are not systematic or remain capped.

Even in France, a program solely focused on Damages/RC can leave blind spots on the risks of political violence in the broad sense.

Internationally, coverage varies greatly depending on the country. The perimeter can rely on:

• State pools mandatory or optional (eg Pool Re in the UK, TRIA in the US);
• Classic damage policies, often with exclusions or sub-limits for terrorism/political violence;
• No full coverage available in certain markets.

Where the importance of a harmonized global program lies.

A custom-made cover for total resilience

To maximize protection, it is essential to effectively articulate Damage/RC guarantees with a standalone Terrorism & Violence policy designed on measure. These specialized solutions allow:

• To fill the exclusions and sub-limits of traditional policies, by taking over on uncovered or capped risks.
• To offer a dedicated, "ring-fenced" capital that avoids competing with Damage capital in case of multiple claims and stabilizes cash flow during the resumption of activity.
• To secure the claims experience, thanks to expert teams accustomed to managing sensitive events, thus reducing the duration and cost of downtime.
• To integrate targeted RC extensions to maximize the scope of guarantees.

This complementarity is the key to a robust and coherent program in the face of evolving risks.