TERRORISM COVER IN THE CONTEXT OF EXTRAORDINARY INSURANCE RISK

TERRORISM COVER IN

THE CONTEXT OF EXTRAORDINARY

INSURANCE RISK

TERRORISM COVER

GENERAL FRAMEWORK

EXTRAORDINARY RISKSYSTEM OF COVER

GeologicalNATURAL RISKS Climatic

Terrorism RebellionPolitical-social SeditionRisks Uprising Popular Disturbance Actions by Armed

Services

- The risks covered are defined legally.

- Cover must be included in ordinary policies for personal accident insurance and certain sectors of property damage.

- Subsidiary action by the “Consorcio de Compensación de Seguros”.

- Compulsory surcharge collected by the entities issuing the ordinary policy.

- Scope: Spanish territory.

- Guarantee conditions: as in the ordinary policy (capital insured, etc.).

- For property, only direct material damage is indemnified.

BASIC FEATURES OF EXTRAORDINARYRISK COVER

LEGAL DEFINITIONS

TERRORISM

POPULAR DISTURBANCE

Any violent action intended to destabilise the establishedpolitical system, or to create fear and insecurity in the

social context in which it occurs.

Any group action intended to attack public peace, creating a disruption of order and causing

personal injury or property damage.

TERRORISM THE SITUATION FOLLOWING 11 SEPT.

AIR NAVIGATION: (Civil liability to non-passengers)

ECOFIN authorises support measures through reinsurance for the account of the State

SPAIN: Reinsurance for the account of the State, administered by the “Consorcio de Compensación de Seguros”

TERRORISM THE SITUATION FOLLOWING 11 SEPT.

TERRORISM REINSURANCE FOR LOST PROFIT, BY THE“CONSORCIO DE COMPENSACIÓN DE SEGUROS”

THE CCS-UNESPA AGREEMENT 31-1-2002

COVER FOR ALL POLICIES, ANDIN ALL CATEGORIES

SUBSIDIARITY

SOLIDARITY MUTUALISATION

COMPENSATION

GEOGRAPHICAL

BETWEEN RISKS

TIMING

COLLABORATION

EXTRAORDINARY RISKS

COVER FUNDAMENTALS

PRINCIPLES

EXTRAORDINARY RISKS

INDEMNIFICATIONREQUISITES

TO HOLDDAMAGE

INSURANCE IN CERTAINCLASSES

COMPULSORY INCLUSION OF

EXTRAORDINARYRISKS

PAYMENT OFTHE

COMPULSORYSURCHARGE

FIRES AND NATURAL FORCES,MOTOR VEHICLES (Not Civil Liability),

RAILVEHICLES,ROBBERY, BROKEN WINDOWS, BREAKDOWN OF MACHINERY,

ELECTRONIC EQUIPMENT AND COMPUTERS, FINISHED CIVIL ENGINEERING WORK,

PERSONAL ACCIDENTS

CLASSES ACCESSIBLE TO THE “CONSORCIO”

EXTRAORDINARY RISKS

INSURERPRIVATE COMPANY:

If wished, Extraordinary Risks may be covered:- Along with ordinary risk cover.

- In a separate policy.

EXTRAORDINARY RISKS

INSURER

THE “CONSORCIO DE COMPENSACIÓN DESEGUROS”:Covered when:

- The private company gives no explicit cover. (SUBSIDIARITY)

- The private company does provide cover, but cannot meet its indemnification obligations (bankruptcy, temporary receivership, CLEA)

(GUARANTEE FUND)

THE “CONSORCIO” DOES NOT DIRECTLY UNDERWRITE THE COVER

EXTRAORDINARY RISKS

CHARACTERISTICS OF COVER

• LEGALLY DEFINED

• QUALITATIVE AND NOT QUANTITATIVE: Not conditioned by territorial extension, by the number of affected parties, or extensive damage.

• AUTOMATIC: Official declaration as a catastrophic area is not required.

EXTRAORDINARY RISKS

RISKS COVERED

NATURAL PHENOMENA

EARTHQUAKESEAQUAKE

FLOODVOLCANIC ERUPTION

ATYPICAL CYCLONIC STORMFALLING SIDEREAL BODIES

PHENOMENA WITHPOLITICAL-SOCIAL EFFECTS

TERRORISMREBELLION

SEDITIONUPRISING

POPULAR DISTURBANCEACTION BY THE ARMED FORCES

EXTRAORDINARY RISKS

DAMAGE DIRECTMATERIALDAMAGE

INDEMNIFIABLELOSSES

EXPENSES

Salvage

Demolition and clearing

EXTRAORDINARY RISKS

SCOPE OFCOVER

RISKS COVERED: Extraordinary Risks

SUM INSURED : That of the ordinary insurance

PROPERTY AND PERSONS COVERED: those under the ordinary cover

TERMS INCLUDED OPTIONALLYIncluded in the ordinary cover: first risks,indemnification limits.

Application of the PROPORTIONAL RULE

EXCLUSION PERIOD 30 days following the effective date of the policy

INDEMNIFICATIONFRANCHISE

(Property Damage)

GENERAL: 10% loss

LARGE CAPITALS: 15%

NO> 1 % of the insured sum

< 150.25 Euros

• OCCURRENCE

• DIRECT C.C.S. PAYMENT TO THE INSURED

Verification• APPRAISAL Occurrence

Cause covered

• CLAIMCompanies

C.C.S.

EXTRAORDINARY RISKS

CLAIM MANAGEMENT

THE “CONSORCIO DE COMPENSACIÓN DE SEGUROS” EXTRAORDINARY RISKS: COVER FOR TERRORISM

AND POPULAR DISTURBANCE

PROPERTY DAMAGE

- CONSUMPTION OF PREMIUM. ALL CAUSES

- AMOUNTS PAID ACCORDING TO CAUSES

- AMOUNTS PAID FOR TERRORISM AND POPULAR DISTURBANCE,

ALL CAUSES

- AMOUNTS PAID FOR TERRORISM AND POPULAR DISTURBANCE

BY THE YEAR OF LOSS

- AMOUNTS PAID FOR TERRORISM AND POPULAR DISTURBANCE

ACCORDING TO RISK TYPE



DAMAGE TO PERSONS

- AMOUNTS PAID FOR TERRORISM AND POPULAR DISTURBANCE,

ALL CAUSES

- AMOUNTS PAID FOR TERRORISM AND POPULAR DISTURBANCE BY

THE YEAR OF LOSS

- NUMBER OF VICTIMS OF TERRORISM AND POPULAR DISTURBANCE



THE MOST COSTLY INDIVIDUAL LOSS CAUSED BY

TERRORISM

Note:

- All figures in Euros

- All figures updated in Euros to 31-12-2001

PROPERTY AND PERSONAL LOSS

- AMOUNTS PAID ACCORDING TO CAUSES

EXTRAORDINARY RISKS: PREMIUM CONSUMPTION, PROPERTY DAMAGE SERIES 1971 - 2001

ALL CAUSES

EXTRAORDINARY RISKS Updated Premiums and Loss Rate

0500.000.000

1.000.000.0001.500.000.0002.000.000.0002.500.000.000

3.000.000.000

1971 - 1980 1981 - 1990 1991 - 2000 2001

SERIESPremiums Loss Rate

Decade of Updatet Updated Premiumocurrence premiums loss rate consumption

1971 - 1980 838.760.747 694.813.760 82,84

1981 - 1990 1.253.489.787 1.821.943.058 145,35

1991 - 2000 2.565.364.367 998.200.432 38,91

2001 349.915.399 105.185.797 30,06

TOTAL 5.007.530.301 3.620.143.047 72,29

Update to 31-12-01

Figures in euros

EUROS

EXTRAORDINARY RISKS – PROPERTY DAMAGE SERIES 1971 – 2001

(*) Includes former cover for rain, hail, snow and hurricance. (**) Unclassified loss rate for the first years in the series.

UPDATEDC A U S E AMOUNTS %

PAID

Flood 2.257.575.150 62,4

Earthquake 16.568.317 0,5

Atypical ciclonic storm(*) 561.584.095 15,5

Falling meteorites 74.714 0,0

Terrorism 278.642.256 7,7

Uprising 813.121 0,0

Popular disturbance 48.355.630 1,3

Actions by the Armed Services 1.049.738 0,0

Unclassified (**) 455.480.027 12,6

TOTAL 3.620.143.047 100

Update to 31.12.01Figures in Euros

EXTRAORDINARY RISKS: PROPERTY DAMAGESERIES 1971 - 2001

TERRORISM % OF

TERRORISM + ALL

POPULAR DISTURBANCE CAUSES

3.620.143.047 278.642.256 48.355.630 326.997.886 9,03


POPULAR DISTURBANCE

ALL CAUSES

UPDATED AMOUNTS PAID

EXTRAORDINARY RISKSProperty Damage

Loss Rate by Cause

9%

91%

Terrorism +Popular Disturbance

Other causes

EXTRAORDINARY RISKS – PROPERTY DAMAGE. SERIES 1971 - 2001

SUMS PAID UPDATED, BY YEAR OF OCCURRENCE

YEAR OF POPULAR TERRORISM + OCURRENCE DISTURBANCE POPULAR DISTURBANCE

1971 0 0 01972 21.631 0 21.6311973 173.249 0 173.2491974 185.775 0 185.7751975 1.118.677 0 1.118.6771976 2.592.162 0 2.592.1621977 13.465.701 691 13.466.3931978 10.356.143 1.749 10.357.8921979 8.641.568 0 8.641.5681980 7.621.770 17.661 7.639.4311981 3.405.690 32.156 3.437.8461982 46.462.418 2.333 46.464.7521983 11.413.651 591 11.414.2421984 9.471.203 9.573 9.480.7761985 6.097.575 642.956 6.740.5321986 10.047.119 707.091 10.754.2091987 21.864.491 216.123 22.080.6141988 6.848.266 857.208 7.705.4741989 2.805.708 5.345.626 8.151.3341990 12.550.008 1.796.646 14.346.6541991 9.855.178 3.395.794 13.250.9721992 8.423.292 2.196.168 10.619.4611993 5.756.729 1.228.595 6.985.3241994 2.837.704 2.404.540 5.242.2441995 7.300.142 4.598.125 11.898.2671996 11.580.085 7.081.937 18.662.0221997 14.674.398 5.791.791 20.466.1891998 4.922.534 3.242.388 8.164.9221999 5.380.311 1.057.371 6.437.6822000 15.336.683 5.621.523 20.958.2062001 17.432.394 2.106.991 19.539.385

TOTAL 278.642.256 48.355.630 326.997.886Update to 31.12.01Figures in Euros

TERRORISM

EXTRAORDINARY RISKS: PROPERTY Amounts paid (updated),

Terrorism and Popular Disturbance

0

10

20

30

40

50

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

Mil

lio

ns

of

Eu

ros

YEARS

EUROS

EXTRAORDINARY RISKS – PROPERTY DAMAGE SERIES 1994 – 2001

UPDATED SUMS PAID, DISTRIBUTED BY RISK TYPECAUSE OF LOSS: TERRORISM AND POPULAR DISTURBANCE

UPDATEDTYPE OF RISK AMOUNTS %

PAID

Homes and Communities 22.386.214 20,1

Offices 29.540.432 26,5

Commerce and Other, Simple 32.810.874 29,5

Industrial 8.407.226 7,5

Automobiles 17.528.201 15,7

Civil Engineering Work 695.972 0,6

TOTAL 111.368.919 100


UPDATED AMOUNTS PAID SERIES: 1994 - 2001. Percentage Distribution

20%

27%

28%

8%

16%1%

Homes and Communities

Offices

Commerce and Other, Simple

Industrial

Automobiles

Civil Engineering Work

EXTRAORDINARY RISKS: PERSONAL DAMAGE .SERIES 1987 - 2001

TERRORISM % OF

TERRORISM + ALL

POPULAR DISTURBANCE CAUSES

24.153.045 21.415.965 131.142 21.547.107 89,21


POPULAR DISTURBANCE

ALL CAUSES

UPDATED AMOUNTS PAID

EXTRAORDINARY RISKS: Personal Damage Loss Rate by Causes

10,8%

89,2%

Terrorism + PopularDisturbance

Other Causes

EXTRAORDINARY DAMAGE – PERSONAL DAMAGESERIES 1987 - 2001

UPDATED AMOUNTS BY YEAR OF OCCURRENCE

EXTRAORDINARY RISKS: PERSONS Amounts paid (updated),


0

500.000

1.000.000

1.500.000

2.000.000

2.500.000

3.000.000

3.500.000

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

YEARS

YEAR OF POPULAR TERRORISM +

OCURRENCE DISTURBANCE POPULAR DISTURBANCE

1987 1.746.625 0 1.746.625

1988 935.435 9.288 944.723

1989 1.501.823 47.912 1.549.735

1990 1.151.608 0 1.151.608

1991 2.338.821 34.603 2.373.424

1992 2.467.980 21.436 2.489.416

1993 954.435 0 954.435

1994 848.248 0 848.248

1995 2.506.699 0 2.506.699

1996 1.049.206 17.903 1.067.109

1997 748.814 0 748.814

1998 895.252 0 895.252

1999 0 0 0

2000 3.201.389 0 3.201.389

2001 1.069.631 0 1.069.631TOTAL 21.415.965 131.142 21.547.107


TERRORISM

EUROS

EXTRAORDINARY RISKS – PERSONAL DAMAGE SERIES 1994 - 2001

NUMBER OF VICTIMS BY YEAR OF OCCURRENCE OF LOSS CAUSE OF LOSS: TERRORISM AND POPULAR DISTURBANCE

YEAR POPULAR TERRORISM +

OCURRENCE DISTURBANCE POPULAR DISTURBANCE

1994 29 0 29

1995 32 0 32

1996 15 2 17

1997 15 0 15

1998 9 0 9

1999 0 0 0

2000 32 0 32

2001 14 0 14

TOTAL 146 2 148

TERRORISMNo. OF VICTIMS


15

9

0

14

29

17

3232

0

5

10

15

20

25

30

35

40

1994 1995 1996 1997 1998 1999 2000 2001

DATE: 18 April 1982

PLACE: Madrid

UPDATED SUMS PAID: 37.331.580 Euros

INSURED: Telefónica, S.A.

THE MOST COSTLY INDIVIDUAL CLAIM CAUSED BY TERRORISM

EXTRAORDINARY RISKS – PROPERTY AND PERSONAL DAMAGE - SERIES 1987 - 2001

UPDATED C A U S E AMOUNTS %

PAID

Food 1.493.339.427 85,45

Earthquake 16.551.204 0,95

Atypical Cyclonic Storm 19.743.330 1,13

Falling meteorites 74.714 0,00

Terrorism 168.983.889 9,67

Uprising 813.121 0,05

Popular Disturbance 47.071.969 2,69

Actions of the Armed Services 1.061.969 0,06

TOTAL 1.747.639.622 100Update to 31.12.01Figures in Euros

EXTRAORDINARY RISKS: Property and Personal Damage

Loss rate by Causes

85,4

9,7

2,2

2,7Flood

Terrorism

PopularDisturbance

Rest

Documents

TERRORISM COVER IN THE CONTEXT OF EXTRAORDINARY INSURANCE RISK