New modes of attack are causing a shift from large terrorist events aimed at property destruction to less sophisticated attacks causing mass casualties and fear. With global commerce, tourism and financial markets impacted, demand is growing for modeling, capacity and protection-gap solutions to increase resiliency against such attacks.
Commenting on these trends, Guy Carpenter offers insights for driving innovation in terrorism protection in its report, Terrorism: A Maturing Market Meets an Evolving and Expanding Peril.
Calling for new products with enhanced coverages to help clients realign property and casualty (re)insurance protections with the changing peril, Charles Whitmore, Managing Director, Guy Carpenter, said, “The (re)insurance industry needs to ensure that protection covers and solutions evolve to fit the full breadth of attack methodologies and narratives. Today, lone-wolf attacks in public places aim to cause fear and loss of life as much as, if not more than, property destruction.”
In the report, Guy Carpenter highlights several areas in which innovation can drive more efficient risk management solutions for this dynamic exposure, including:
- Augmentation of the insurance value chain by capital markets
- New product development such as active shooter and non-damage business interruption policies, organized crime coverage extensions and life and health coverages
- Solutions for evolving exposures like third-party liability, workers compensation and cyber – especially in light of the WannaCry and NotPetya cyber-attacks
- Expansion of public/private risk-sharing mechanisms to de-risk government balance sheets and reduce coverage gaps
- Advanced analytics including computational fluid dynamic models, frequency estimations and chemical, biological and radiological modeling.