A Government Accountability Office (GAO) study of how six European countries deal with catastrophe risks found that four provide government backing for terrorism insurance. The report is seen as a plus for congressional renewal of the Terrorism Risk Insurance Act (TRIA), which expires at the end of 2005. "Many countries around the world–not just major European countries, but countries like Israel and South Africa–have long since determined that terrorism is not a risk that can be completely insured in the private sector," says Robert Hartwig, chief economist with the Insurance Information Institute. "And these are countries that have a lot more experience with terrorism than we do."

The GAO found that in four of the countries–France, Germany, Spain and the United Kingdom–the government provides financial guarantees for losses arising from terrorist attacks, while Italy and Switzerland rely on private insurance. All six allow insurers to build tax-deductible reserves against such losses.

Congress is waiting for a Treasury report on TRIA, which is due out by June 30.

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