Depending on domicile, insurers can often access public/private risk-sharing mechanisms that can help manage the financial threat of terrorism. Coverage purchased via these mechanisms is typically triggered by a national government’s declaration that a terrorist event has occurred.
Given the potential scale of the threat and impact on the insurers’ distribution channels, several of these risk-sharing pools have taken bold steps to increase their penetration into additional coverages and lines.
Due to the existence of these pools, property insurance policies can often be extended to include terrorism coverage in accordance with the cover offered by the pool. Although originally designed for property losses, the covers are evolving in line with new threats.