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The terrorism insurance should be reviewed


Frédérique De Simone

26 July 2019 11:30

Photo : Freepik

The economic losses in connection with terrorist attacks are, in the last few years, more large, while victims are less numerous, and damage less important, reports Marsh , in his report 2019 on the risk of terrorism.

In its last report, Marsh states that the nature of terrorism is moving from large-scale attacks against property attacks less sophisticated, where the attackers advocate of white weapons, firearms, and vehicles, with often no link with a terrorist group in particular. A situation that requires professionals of the risk management to review their strategy to adequately protect the property, employees, and business finance.

The economic cost of the terrorist attacks in the world represents on average 83 billion of u.s. dollars from 2013 to 2017.

The terrorism insurance could create an imbalance

The reinsurers are in a position to provide risks associated with terrorism conventional. However, the potential exposure in the event of nuclear, biological, chemical and radiological (NBCR) is much larger and leads almost automatically to a net loss for the reinsurers, because they do not generally cover.

This is why, in 2002, the us congress created the Law on the program of insurance against terrorist risks, a system of compensation is shared between the public and the private sector for certain insured losses resulting from an act of terrorism, which helps reinsurers to offer coverage longer waterproof. A regulation that has encouraged other countries to do the same.

If the regulation expires in 2020, or is renewed with significant increases in retention, the insurers who cover terrorism and that have reserves below $ 300 million will likely need to acquire additional capacity on the reinsurance market to private to protect their capital and to satisfy rating agencies and regulators. So that the premiums will increase and some risks will be left behind. Federal support remains essential, therefore, for the reinsurance market in private continues to provide coverage for high-risk areas.

The coverage of the political violence on the rise

Coverage against political violence is on track to surpass the terrorism insurance in the United States, particularly due to the rise of the extreme right. However, Marsh warns that taken individually, each of its two covers this gap and leave one way or another a hole in the protection of the customers.

The policies that ensure the risk policy respond to a series of shares and to the instability of the government, including expropriation of assets, forced abandonment, currency inconvertibility, non-payment and frustration of contract.

Marsh adds in its report that, despite existing safeguards, many companies located in the areas affected by the attacks or in the vicinity thereof, seen a decrease in their traffic over a significant period of time, that the seats sometimes in a financial abyss for which they are not insured. The sectors of tourism and retail are particularly exposed to the risk of losses as a result of terrorist attacks, since it is often these areas that are targeted.

North america

The United States are the countries of North America, where the risk of suffering a terrorist attack is the largest. It is also the country which has the highest rate of accession to the terrorism insurance in the world.

“The United States record a higher rate of mortality and arrest in connection with terrorism, local, or Americans who attack their country, that in connection with attacks by another country,” said the assistant director of the division of counter-terrorism to the federal Bureau of investigation (FBI), Michael c. Mcgarrity.

The risks of terrorism in Canada and Mexico have been significantly reduced over the past five years.


Two-thirds of terrorist attacks in Western Europe between 2014 and 2018 have not caused property damage, according to the british reinsurer Pool. Re. However, several companies have suffered significant losses as a result of various attacks.

The losses approximate total incurred by the 28 member States of the EU as a result of terrorist events, from 2004 to 2016, have been of 180 billion euros. The operations of fight against the extreme right in western Europe have increased sharply in 2017 and 2018.

Asia-Pacific and Africa

The Asia-Pacific and Africa are the two regions of the globe where the risk of attack is most important and where the terrorist groups are the most numerous.

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