Terrorism insurance has become an increasingly crucial product for insurers and brokers in recent years – and its importance looks likely to grow further if a new report is to be believed.
Pool Re has released its
Terrorism Threat and Mitigation Report, covering the period from August-December 2016, which outlines key terrorism threats and trends affecting the UK. It states that the terrorism threat to the UK remains ‘severe’, with Islamic extremism and particularly Al Qaeda (AQ) and Daesh leading the concern.
“Despite the probable military defeat of Daesh in Iraq and Syria, its ideology is likely to endure and they will look to increasingly establish themselves in ungoverned spaces such as the dark web, creating a virtual caliphate,” said Julian Enoizi, chief executive of Pool Re.
“In tandem with this is the potential reassertion of AQ as the dominant global terrorist group.”
The report highlighted that there were 10 bladed attacks in Europe during the period , including the murder of Jo Cox MP as the single attack in the UK. Meanwhile, there were 10 firearm incidents, again with the one in the UK being that of Jo Cox; three vehicle attacks, with none in the UK; 10 attacks involving PBiEDs or suicide bombings, with none in the UK; and seven VBiED attacks, the majority of which took place in Turkey.
Of particular note for the UK is a rise in far-right extremism, while the Home Office assesses around 850 people have travelled from the UK to engage in the Syrian conflict and about half have returned. The report states that “managing this extremist travel… is likely to present extensive casework for the police and MI5.”
Threats of chemical, biological, radiological and nuclear terrorism in the UK were described as “high impact, low probability”; while cyber threats were described as increasing, with some proving to be internal from employees with malicious or hostile intent and others external from a range of sources.
An emerging threat, meanwhile, is ‘unmanned terror’, with the report highlighting that “there have been significant developments in the commercial and consumer drone markets over the last three years.”
Enoizi called on brokers and insurers to enhance their understanding of the threats and provide a resource to inform risk modelling and management. However, it is noted that there are “significant gaps,” currently.
“Not all components of the economic loss after a major terrorist attack will be insurable, but an opportunity does seem to exist for more of the risk to be taken up by the commercial market,” the report notes. “Non-damage business interruption (BI) and loss of attraction cover is already available, but it is not currently taken up widely enough to provide a systemic level of resilience.”
With regards to coverage for individuals, it highlights that there is a “potential gap where work, personal or government schemes may not provide adequate protection. Solutions are available in the stand-alone market for issues such as hostage barricade and active shooter scenarios, but these tend to be accessed only by well-informed insurance buyers.”
Clearly there are opportunities to be taken if insurers and brokers are able to ram home the importance of the coverage and overcome the uncertainty surrounding the products.
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