Method of NHT
The NHT is a reinsurance company. This means that the insurance claim of an insured party is submitted to and handled by the relevant insurer. The claims handling insurer is, in turn, insured via the NHT if this insurer is registered as a member of the NHT. Therefore, insurance claims relating to terrorism cannot be submitted directly to the NHT by customers themselves or by their insurance intermediary.
If a terrorist event occurs and it is to be expected that NHT will have to pay the relevant insurance claims, the NHT will as soon as possible establish what the concrete events are that qualify as a terrorist act, and which events qualify a consequence of this terrorist act, and will communicate this as soon as possible to the participating insurers.
If an insurer is confronted with an insurance claim from a client before this time which the insurer believes to be a consequence of a terrorist act, the insurer reports this claim to the NHT. The NHT will then decide whether the insurance claim reported by the insurer qualifies as a consequence of a terrorist act. This decision is then fed back not only to the relevant insurer(s), but also to other members, so that they too are aware of this and can report any related insurance claims.
The insurer must report the insurance claim to the NHT as soon as possible. If the insurer receives an insurance claim which it suspects is related to a terrorist act, the claim must be reported to the NHT within 3 weeks. In practice, when an insurance claim is initially submitted, it is not always immediately clear whether there is a link with a terrorist act. As soon as more information becomes known and the insurer has a strong suspicion that it may be linked to terrorism, the insurance claim must be reported to the NHT within 3 weeks of that moment.
The NHT does not itself determine which types of insurance claims caused by a terrorist act qualify for payment. This is determined on the basis of the insurance policy taken out by the policyholder. If an insurance policy provides terrorism coverage and the insurer providing the policy is a member of the NHT, the insurance claim can be reported to the NHT and may be eligible for payment through the NHT.
The NHT applies a market deductible of EUR 7.5 million per year for all insurers combined. If the total amount in insurance claims in any one year is less than EUR 7.5 million, the NHT will not pay the cost of the claims. The cost of the claims is then borne entirely by the individual insurer(s). If the total amount in claims is higher, the deductible does not apply and all reported claims fully count towards the calculation of the payment percentage and payment through the NHT.
It is important that insurers report all claims they receive, even if they expect that the total amount in claims will remain below the deductible. After all, it is never clear in advance whether the deductible will be exceeded.
For individual insurers, a deductible of 2.5% of the premium volume is used, with a minimum of EUR 50,000. This concerns 2.5% of the premium volume of the insurer which served as the basis for determining the contribution to the NHT.
This individual deductible only applies if the total amount in claims for all insurers remains below the market deductible of EUR 7.5 million. The deductible has been introduced so that insurers can rely on the NHT even if the total amount in claims due to a terrorist attack remains below the market deductible, but one or a few (smaller) insurers are disproportionally impacted.
