Our latest report looks at the evolving nature of global terrorism risks, including analysis of trends at a regional and sector level. In this year’s report, you will find insurance market insights and data and rankings from our World Risk Review ratings system.
Terrorism remains a dynamic global risk and a serious threat for people and organizations. The evolution of terrorism risk exposes many countries to complex threats from both international and home-grown groups, as well as individuals acting on their own, known as “lone wolves.”
Ebbs and flows in terrorism are common, but the evolving and ever-present nature of this risk requires people and organizations to be continuously on guard.
The means and perpetrators of terrorist attacks continue to shift, with soft or relatively unprotected targets becoming more of a focal point.
In response, insurers are continuing to develop and offer new and innovative solutions for risk professionals, who have been challenged to adopt new strategies to protect properties, employees, and balance sheets in response to constantly evolving threats.
The market for property terrorism insurance remains competitive for most buyers, due in recent years to a steady decline in the number of global terrorist incidents and minimal insurance claims.
In the US, attention will soon turn to Congress as the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) approaches expiration at the end of 2020. TRIPRA, as with similar public-private mechanisms in other countries, has played an important role in ensuring the continued stability and health of the property terrorism insurance market, and Marsh will continue to monitor developments regarding its renewal.
Below we summarise the key highlights from the report:
CHANGES IN TERRORIST ATTACKS
The nature of terrorism is shifting away from large-scale attacks on property to less sophisticated ones, often carried out by individuals without ties to a particular group. Such changes can affect the way your organization prepares and responds to an incident.
From May 2018 through May 2019, terrorism risk ratings fell across 116 countries, most notably in Egypt, Turkey, and Spain. Little improvement, however, occurred in the world’s riskiest states for terrorism, including Afghanistan, Yemen, and Iraq.
SHIFTING GEOPOLITICAL RISKS
Terrorism can change over time in a given country or region. To best protect your business and people, it’s important to know the risks in the areas where you do business. In our report, we provide terrorism insurance insights for North America, Latin America, Caribbean, Europe, Sub-Saharan Africa, Middle East, North Africa and Asia Pacific.
Insurers have responded to changes with coverage such as active assailant coverage and non-damage business interruption. It’s also important to know when a coverage such as political violence insurance may best suit the organization’s needs, or when policies that wrap around existing coverage and government schemes may be most effective.
Education entities, media, financial institutions, and real estate companies had the highest terrorism insurance take-up rates by industry in 2018.
Government schemes provide an important backstop in many areas. But, as with the US TRIPRA program, they can be subject to deadlines requiring periodic re-evaluation and reauthorization.
The number of Marsh-managed captives actively underwriting one or more insurance programs that access TRIPRA increased 10% to 182 captives in 2017. The number of US companies purchasing terrorism coverage embedded in property policies under TRIPRA remained consistent at 62% in 2018.
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