The industry should expect a huge increase in insurance cover demand following the recent deadly terror attacks in Paris, Nice and Brussels, according to a new research by consultancy giant KPMG.
The firm, which will release its latest findings this week, is predicting the political risk and crisis management insurance market to grow from US$8 billion in 2015 to US$10bn in 2018, the
Financial Times reported.
“There is a shift in the nature of terror,” Paul Merrey, KPMG partner in London, told the publication. “In the 1990s it was about property damage. The incidents we’re seeing now are about maximising casualties.”
Merrey pointed out, however, that insurers have been failing to meet the needs of consumers.
“There is a gap between what insurers are providing cover for and what customers actually need. We see an opportunity for the industry as a whole to collectively find solutions for this,” the
Financial Times quoted Merrey as saying.
He said that terrorism insurance tends to focus on property damage, instead of business interruption losses that companies incur from the terror attacks.
Merrey said in 2015, the global cost of terrorism was US$32bn, but the indirect cost was much higher.
“If you look at the Paris incident, business interruption costs were $12bn,” he told the
Financial Times.
According to the KPMG report, the recent terror attacks have created economic losses despite leaving properties relatively undamaged.
Related stories:
UK’s first terrorism travel insurance launched
Arthur J Gallagher responds to global threats with terrorism solution
