GAREAT

GAREAT (Gestion de l'Assurance et de la Réassurance des Risques Attentats et Actes de Terrorisme) is a French economic interest group created in 2002, after the September 11, 2001 attacks. They had shown that the private market alone could not absorb terrorist losses on that scale. GAREAT works through tiered co-reinsurance. Member insurers jointly retain a first tranche of losses, then a private reinsurance program takes over up to a certain ceiling. Beyond that, the Caisse centrale de réassurance (CCR) steps in, backed by the French state's unlimited guarantee. Insurers that are members of France Assureurs must join GAREAT's large risks section, which covers risks with sums insured of at least 20 million euros. The small and medium risks section, open to risks of 6 to 20 million euros, is optional. Coverage applies to attacks and acts of terrorism as defined by Articles 421-1 and 421-2 of the French Criminal Code, with no recognition decree, unlike the CatNat scheme. This public-private architecture spreads the risk across three levels and so solves the terrorism insurability problem: the private market for lower layers, CCR for intermediate layers, the state as ultimate safety net. It serves as a reference model in debates on analogous mechanisms for systemic cyber risk.