Compensating the Victims of the Paris Terror Attacks
France is still recovering from its worst terrorist episode in decades, following two deadly attacks by extremists in the capital. Twelve people were massacred at the offices of the satirical magazine Charlie Hebdo on 7 January 2015. The next day a lone gunman shot two people in the southern Paris suburb of Montrouge, killing a policewoman. The same gunman then murdered four hostages in an attack on a kosher supermarket at Porte de Vincennes in the east of Paris.
The personal tragedies involved in these terrible events raise the question of how the victims and their families will be compensated.
France moved to establish a comprehensive system of compensation after a series of bombings in Paris in 1985. Coverage of acts of terrorism within property insurance contracts was made compulsory in 1986; at the same time a guarantee fund was put in place to compensate injured victims - or their beneficiaries in case of death.
In 1990 a further law created the FGTI (Fonds de Garantie des Victimes d’Actes de Terrorisme et d’Autres Infractions), which combined coverages relating to terrorism and some common law crimes.
The FGTI is not funded by the French State but is financed mainly by a levy of €3,30 on each and every property insurance contract. In 2013 the FGTI budget was around €393 million, of which €278 million came from insurers, €73 million from recoveries against perpetrators, and €42 million from investment.
Nearly 4,000 victims of terrorism have received a total of around €100 million from the FGTI since 1985.
The basis of compensation for bodily injuries (or the victim’s death) resulting from an act of terrorism is the same as for car accidents or medical malpractice cases. The compensation structure for the most severe injuries is based on 20 heads of damage, comprising 10 economic and 10 personal damages. These two categories are subdivided into temporary damages: before medical stabilization and, for future damages, after stabilization.
Four other heads of damage for close relatives are added to the 20 heads of damage that relate to the direct victim. On top of this general structure, a specific moral head of damage is added for the victims of acts of terrorism.
In December 2013 a specific provision was included to help the families of hostages and close relatives so they can now obtain compensation during the period of detention of their relative. An initial amount is paid for the first month of absence, and then a lower monthly payment is paid until the end of the detention. Other rules that govern how the FGTI works include:
- Only bodily injury or fatalities are compensated by the FGTI. Material damages from terrorism are covered by insurers through property damage contracts.
- When a terrorist attack is committed on French territory, each and every victim can get compensation irrespective of nationality.
- When the terrorist attack is committed abroad, only French victims or beneficiaries are eligible for compensation.
- Following an attack, the FGTI contacts victims and/or their families directly through a procedure specifically provided in the insurance code. The FGTI must make one or more provisional payments to the victim (or, in the event of the victim’s death, to beneficiaries) within one month of the request made to it. Also the guarantee fund must make an offer of compensation within three months as from the date on which the victim provides it with evidence of losses.
It is possible for victims of terrorism to take a judicial route against the Fund to obtain compensation, but in reality the offer procedure is so efficient that nearly all cases related to terrorism have been settled out of court so far.
France was a pioneer when it created its insurer funded system for compensating victims of terrorism in 1986. Now, with terrorist attacks regularly testing the security of countries around the world, it’s possible that more governments will have to review their systems of compensation - and that could have big implications for insurers.