Marsh has released the “2016 Terrorism Risk Insurance Report,” which summarises terrorism insurance trends, provides benchmarking related to terrorism insurance take-up rates and pricing, and offers risk management solutions for terrorism exposures.
According to the report, in the past few years, there is a shift from terrorist attacks perpetrated by groups against high value targets, to attacks committed by so-called “lone wolves” aimed at soft targets. These “lone-wolf” terrorist attacks, said Marsh, typically cause minimal damage to property, but can bring indirect costs through business interruption.
Explained the global broker, business disruption costs can outweigh potential cost of property damage if, for example, a city or region was put under curfew, businesses were closed indefinitely, travel was disrupted, or reservations were cancelled.
Marsh cited, for example, how recent attacks in Egypt, France, Lebanon, and Mali, has resulted to about 10 per cent of cancelled booked trips by American travellers; or how this year’s bombing of an airport in Brussels has caused airlines, hotel chains, and travel websites to experience drops in their stock prices.
With this shifting nature of terrorism, companies begin to inquire whether they are adequately covered for such risks.
To address these concerns, Marsh said insurance providers offer coverage enhancements that take the following issues into account: active shooter situations and resulting consequences; extra expense for evacuating people due to a threat; contingent interruption of operations; cancelled reservations; and loss of attraction.
With the increasing incidence of small group and “lone wolf” terrorist attacks, many organisations are assessing their exposure to and coverage for indirect losses and business interruption risks, reported Marsh.