Guy Carpenter conducted a survey in the fourth quarter of 2013 with a number of reinsurers to help quantify the amount of terrorism reinsurance capacity that is currently available in the US market for all lines of business. At the market’s price, multiline terrorism reinsurance capacity is estimated to be approximately USD2.5 billion per program for coverages that include conventional weapon terrorism. Reinsurance capacity for coverages that include nuclear, biological, chemical or radiological (NBCR) is estimated to be approximately USD1 billion per program.
However, it is important to note that these estimates represent theoretical maximums per program and assume the continuation of Terrorism Risk Insurance Program Reauthorization Act’s (TRIPRA) backstop protection. They are also highly sensitive to individual portfolio characteristics, with programs that have significant exposures to central business districts in major cities and notable workers compensation accumulations potentially having less supporting capacity. Furthermore, in the event TRIPRA is allowed to expire or is renewed with significant modifications, multiple programs are likely to simultaneously enter the reinsurance market and the impact this will have on aggregate US reinsurance sector capacity remains untested and is not clearly known.