Office of the Commissioner of Insurance - Facility for Terrorism Risks

To resolve the problem of withdrawal of reinsurance coverage for terrorism risks in EC business following the 911 attacks on the United States, the Government has since January 2002 provided direct EC insurers with a facility up to HK$10 billion in aggregate to cover claims arising out of terrorism under their EC insurance policies ("Facility"). Participation in the Facility is voluntary. Participating insurers are required to pay a monthly charge of 3% on the gross premiums written for the month of their EC policies to the Government. With this Facility, insurers can continue to provide cover for employment-related claims for death and bodily injury caused by terrorist acts and the protection of both employers and employees can be maintained.

The Government has no intention to assume the role of a reinsurer and has made it clear that it will withdraw the Facility once the reinsurance cover for terrorism risks becomes available again from the commercial market. In this regard, the Office of the Commissioner of Insurance is closely monitoring market developments.

To resolve similar problem faced by direct motor insurers, the Motor Insurers' Bureau of Hong Kong, which consists of all insurers carrying on direct motor insurance business in or from Hong Kong, has since January 2002 provided a facility of up to HK$200 million through its First Fund to satisfy third party death or bodily injury claims arising from terrorist acts under motor policies.