November 28th, 2018

Terrorism: Reinsurance Role in Mitigating the Expanding Peril

Posted at 10:30 AM ET

terrorism_121x120More than ever before, reinsurance brokers and underwriters must use their expertise and solutions to keep insurers and citizens adequately protected. With the peril mutating rapidly, the entire insurance value chain is being challenged – by new types of threats, new modes of attack and the terrorists’ deployment of any violent and disruptive means to reach their desired end-state. The (re)insurance industry must remain in tune with these developments; it must gain insights from academia and observers on how the peril is changing, keep alert to new products in the market, unlock new sources of capacity and help clients understand their portfolios more readily so they remain relevant to their consumer base.

The industry is well placed to meet these demands head on. New sources of capital combined with capital supplied by traditional reinsurers can potentially create abundant supply, enabling insurers to grow their offerings, both geographically and in terms of coverage.

For the capital to be released and matched with the right risk profile, improved understanding and modeling of the peril are crucial. Of equal importance is overcoming the challenges of unlocking and creating end-consumer demand and the distribution process.

State terrorism pools and the open market have important roles to play in the next phase of the terrorism protection market’s development. Their participation will likely ensure that the line of defense offered to economies and individuals by the market is relevant and fit for purpose.

Guy Carpenter offers insights for driving innovation in terrorism protection in its report: Terrorism: A Maturing Market Meets an Evolving and Expanding Peril.

Download the report’s Executive Summary >>

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