Historical background

The main stages in GAREAT’s development are as follows:  

- After the loss of 11th September 2001 in New York and the AZF loss of 21st September 2001 in Toulouse in France, reinsurers generally excluded Terrorism coverage from their treaties. A market solution therefore became necessary in France.   

On 1st January 2002, a private - public partnership between insurance companies, the professional associations FFSA (Fédération Française des Sociétés d’Assurance) and GEMA (Groupement des Entreprises Mutuelles d’Assurances), international reinsurers, and the French State set up GAREAT, which purchased Terrorism reinsurance for “Large Risks” (defined as being risks with sums insured     of 6 million euros or more).

- In 2005, and following the modification of Article L 126-2 of the Insurance Code which rendered obligatory the coverage of Terrorism risks under all Property Damage policies, the second section of GAREAT was created for the purpose of covering risks below 6 million euros. 

- In 2010, the threshold for the cession of risks to the “Large Risks” sections was increased to 20 million euros. As a result, and in order to provide GAREAT reinsurance coverage to those Members who so wished, the “Small and Medium-sized Risks” section was enlarged to embrace risks with sums insured below 20 million euros.

Cession to the “Large Risks” section remains obligatory for members of the FFSA and the GEMA as well as for companies which wish to benefit from the State’s unlimited coverage triggered at 2 billion 300 million euros. The unlimited coverage is global and applies to all Members; it is granted for five years, and its renewal and “intervention threshold” are negotiated with the Treasury and with the professional bodies concerned in order to reply to market needs.  

Cession to the “Small and Medium-sized Risks” section remains optional. Until 2012 each company negotiated - on an individual basis - an unlimited treaty with CCR whose “intervention threshold” was specific to each company. With effect from 1st January 2013, and upon its Members’ instructions, GAREAT will negotiate with CCR (which enjoys an unlimited guarantee from the French State) an unlimited treaty consisting of several sections. Each section includes one or several Members, who, if necessary, may be grouped together so that the sum of their respective thresholds reaches the minimum threshold of 20 000 000 euros required by the French State for the triggering of its unlimited guarantee.