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 following the September 11, 2001 attacks, which had revealed the impossibility for the private market alone to absorb very large-scale terrorist losses. Its operation rests on a two-layer co-reinsurance structure. The first layer, the market tranche, brings together private insurers and reinsurers who share losses among themselves up to a certain ceiling. The second layer is covered by the Caisse centrale de réassurance (CCR), which benefits from the French state's unlimited guarantee. All non-life insurers that are members of the French market are required to participate in GAREAT for covered risks (principally large commercial risks above 6 million euros). Coverage activates when a state of terrorist attack is recognized by ministerial decree. This public-private architecture solves the terrorism insurability problem by distributing risk across three levels: the private market for lower layers, CCR for intermediate layers, and the state as ultimate safety net. It serves as a reference model in debates on creating analogous mechanisms for systemic cyber risk.

The November 2015 Paris attacks, notably the Bataclan attack and the café terrace shootings, triggered the GAREAT mechanism. The total indemnified losses were fully absorbed by the pool, illustrating its role as a systemic stabilizer against losses no individual insurer could absorb alone.

Gestion de l'Assurance et de la Réassurance des Risques Attentats et Actes de Terrorisme