Marsh examines state of global property terrorism insurance market

The global property terrorism insurance market remains strong, according to a new report from Marsh.

The terrorism insurance market has sufficient capacity to respond to today’s predominant terrorism threats, according to Marsh’s 2019 Terrorism Risk Insurance Report. The report also includes insurance market insights from Marsh’s World Risk Review platform, which provides risk ratings for nine different perils across 197 countries.

The predominant terrorism threat globally remains extremists focused on inflicting mass casualties in public spaces, rather than large-scale property damage, according to Marsh. The global property terrorism insurance market has responded to this threat by expanding coverage over the last few years – most notably the development of coverage for active-assailant events and non-damage business interruption, Marsh reported.

While the terrorism insurance market is stable globally, the long-term viability of the US property terrorism insurance market is in question, according to the brokerage giant. The Terrorism Risk Insurance Program Reauthorisation Act (TRIPRA) is set to expire in 2020. Should Congress allow the law to expire without a replacement, it could create capacity shortfalls – especially for businesses in high-profile cities and employers with significant workers’ compensation accumulations, Marsh said.

“The existence of government backstops like TRIPRA has played an important role in ensuring the continued stability and health of the global property terrorism insurance market,” said Tarique Nageer, terrorism placement advisory leader for Marsh. “TRIPRA is in place until December 31, 2020, and all eyes are on the congressional schedule as we approach this deadline. In the meantime, US businesses and organisations are advised to work with their brokers as soon as possible to map out a strategy to mitigate potential disruption.”

Other key findings of the report include:

• Between May 2018 and May 2019, terrorism risk ratings fell in 116 countries – most notably in Egypt, Turkey and Spain. There was little improvement, however, in the world’s riskiest nations for terrorism, including Afghanistan, Yemen and Iraq.
• The number of Marsh-managed captives actively underwriting one or more insurance programs that access TRIPRA rose 10% to 182 in 2018.
• The number of US companies purchasing terrorism coverage as part of a property policy held steady at 62% in 2018.
• Educational entities, media, financial institutions, and real estate companies had the highest terrorism insurance take-up rates last year.