Vehicles as weapons: Impact on MTPL insurance in selected European Countries - Swiss Re
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Restricted - do not distribute beyond defined distribution list or make copies Vehicles as weapons: Impact on MTPL insurance in selected European Countries EMEA Claims Conference 2018, Rüschlikon, 6th - 7th March 2018, Andreas Hohl
Restricted - do not distribute beyond defined distribution list or make copies
The factual starting position
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The potential – a glimpse…
On 31 May 2017, a truck bomb exploded in a crowded intersection in Kabul, Afghanistan, near the German
embassy at about 08:25 local time (03:55 GMT) during rush hour, killing over 150 and injuring 413, mostly
civilians, and damaging several buildings in the embassy. The attack was the deadliest terror attack to take place
in Kabul. The diplomatic quarter in which the attack took place is one of the most heavily fortified areas in the city,
with 3-meter-tall blast walls, and access requires passing through several checkpoints. The explosion created a
crater about 4.5 m (15 ft) wide and 3–4 m (10–13 ft) deep. Afghanistan's intelligence agency NDS claimed that
the blast was planned by the Haqqani Network. Although no group has claimed responsibility, the Afghan Taliban
are also a suspect but they have denied involvement and condemned the attack.
EMEA Claims Conference 2018 | Rüschlikon, 6th - 7th March 2018 | Andreas Hohl
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… and a further one…
1993 World Trade Center bombing
Terrorist attack carried out on February
26, 1993, when a truck bomb
detonated below the North Tower of
World Trade Center in NYC. The 1,336
pounds (606 kg) urea nitrate hydrogen
gas enhanced device was intended to
send the North Tower crashing into the
South Tower, bringing both towers
down and killing tens of thousands of
people. It failed to do so but killed six
people and injured over a thousand.
EMEA Claims Conference 2018 | Rüschlikon, 6th - 7th March 2018 | Andreas Hohl
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The guiding question from an insurance perspective
• Can a Motor Third Party Liability Insurer definitely exclude being called for
compensation of damage caused by a terroristic action involving a motor
vehicle?
• Within this framework the following key aspects have to be considered:
– the validity of policy exclusions vs protection of victims
– coverage/compensation of Bodily Injury vs Material Damage
– what if the driver has rented or stolen the vehicle?
– the situation in case of claims arising from domestic accidents vs accidents
abroad or involving vehicles licensed abroad
– the role of special indemnification bodies like Terror or Guarantee Funds and
subrogation
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The statutory basis for most European countries
The following rules regulating the European road traffic play a key role:
• The Directive 2009/103/EC of the European Parliament and of the Council,
providing for mandatory motor vehicle insurance (Article 3) and for a direct
right of action against an insurance undertaking.
• The Internal Regulations of the Council of Bureaux (basis for the Green Card
System), stipulating that claims shall be handled (by the correspondent) in
conformity with any legal or regulatory provisions applicable in the country
of accident that relate to liability, compensation of injured parties and
mandatory motor insurance.
• Article 3 of the Convention of 4 May 1971 on the Law Applicable to Traffic
Accidents, which provides that in event of damage the law applicable is the
law of the country where the damage occurred.
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The overarching considerations for the European
statutory regime
• Facilitation of trans-border circulation
• Enforcement of obligation to insure against liability arising from the use of
motor vehicles
• Minimum amounts of cover for Personal Injury (EUR 1m per victim or EUR
5m per claim) and for Property Damage (EUR 1m per claim)
• Indemnification of third party victims of accidents involving motor vehicles;
comparable treatment irrespective of where the accident happened
• Facilitation of practical access to compensation (e.g. direct right of action
against MTPL insurer, right to claim against MTPL insurer in country of
domicile)
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The contractual situation
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The mechanism -
2016 Terrorist Attack with Truck in Berlin
Insurance Company
Keeper
Operator
$$$ Driver
(Terrorist)
EUR 7.5m Fund /
Scheme
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The mechanism -
Terrorist Attack with Truck in other Jurisdictions
Insurance Company
? Keeper
Operator
$$$ Driver
(Terrorist)
Fund /
Scheme
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Scenario – A clear cut case…
• Terrorist attack in France with motor
vehicle registered in France
• French MTPL insurer
• Statutory Exclusion of insurer’s
liability in case of intentional act
considered as belonging to
“ordre public”
• Policy exclusion for intentional acts
• Special fund (FGTI) in place to
compensate victims of terrorist acts
No MTPL Insurance exposure if attack occurs in France; compensation of victims
by FGTI
No MTPL Insurance exposure if attack occurs abroad and only French victims;
compensation of victims by FGTI
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Scenario – A clear cut case… however…
If
• attack occurs abroad;
• in a country in which policy
exclusions for intentional acts are
not valid (e.g. Belgium)
• and there are foreign victims
then
MTPL Insurance exposure is possible despite of it all for the compensation of
foreign victims, since FGTI only indemnifies French victims of an attack occurring
outside of France!
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The potential, based upon a highly simplified calculation
• A bus insured by a French MTPL policy and carrying 100 foreign passengers
aboard is hijacked and driven into a crowded shopping alley in Brussels.
• Consequence: 100 people dead, 100 severely and 100 otherwise injured.
• If we
– (only) take an average loss of EUR 0.75m per dead
– EUR 4m per severely injured person and
– take EUR 25m for the other injured persons and the material damage
we arrive at a frightening EUR 500 m loss for the MTPL insurer!
Given the enormous loss potential in MTPL, bearing such exposure in mind
appears highly advisable to any MTPL insurer…
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And finally, hot off the press…
• New Swiss Re brochure on the topic at your disposal
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was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy
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presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group
companies be liable for any financial or consequential loss relating to this presentation.
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