The global terror insurance market continues to evolve. Government initiatives are shaped by activities on the ground — from new or changing threats to developments in insurance and reinsurance markets. Since the terror attacks of September 11, 2001 in the United States, government involvement in the global terror insurance market has increased. Several countries have developed comprehensive programs for terror coverage and terror pools … though some still have no governmental support at all.
We have also added a section on modeling and an appendix on the definition of terror around the world. Last year, AIR Worldwide Corporation (”AIR”), following two years of research, updated its damage functions to include the impact of reflected pressure waves following a conventional bomb blast. Prior models had only taken account of incident pressure waves. Reflected pressure is always greater than incident pressure by a factor of up to 13X, depending on the density of the area in question. And, in 2008, Risk Management Solutions (”RMS”) implemented updates to the US model (PTM) including the Target Database, VRG Footprints, Attack Likelihoods, and Building Vulnerability. The target database was updated to include 98 new targets, including chemical plants, government buildings, and convention and entertainment centers. To account for the added targets, the number of potential attacks has also increased, and some existing attack footprints have been repositioned.
Since the definition of terrorism can differ from country to country, there can be gaps in cover for insureds and reinsureds. To assist countries, insurers and reinsurers in understanding the differences, Guy Carpenter has collected information on the definition of terror in countries around the globe. A common theme exists, as a number of nations utilize the Lloyd’s Market Association terrorism wording definition.
This year’s installment of the Global Terror Update addresses terror insurance market developments in 34 countries on six continents - in addition to impacts on the aviation market and an update on models. Terrorism is an evolving threat, and the marketplace is adapting to it.
(The report includes all charts and exhibits)
Click here to have articles from this series delivered directly to your inbox.