The terrorism insurance market is evolving, and demand for coverage is changing as terrorists adapt their tactics and modes of attack.

Insurers in the stand-alone terrorism market, which previously had concentrated on property coverage for large single events, are now offering a variety of coverages, including contingent business interruption and active assailant insurance, and the range of policyholders buying the coverage is expanding, insurers and brokers say. In addition, capacity is increasing, and some sources expect prices to rise, too.

Stand-alone terrorism insurance is a policy providing coverage for an act of terrorism that is not part of the federal backstop program (see related story).

“I would say the conversation may have changed a bit,” said Wendy Peters, executive vice president of financial solutions-terrorism and political violence for Willis Towers Watson P.L.C. in New York. “The dialogue has changed to some of the more current events, which have shown a tendency to move from mass casualty events to using weapons like a truck, which is something we hadn’t contemplated until Nice two years ago.”

There have been several recent attacks involving motor vehicles or knifes, including in August when a van plowed into a crowd in Barcelona, killing 13 and injuring more than 130; the 2017 knife and van attacks in London; and the July 2016 truck attack in Nice, France, which killed 86 and injured 458.

Over the past 12 to 18 months, interest has grown in specialty products such as loss of attraction coverage, which offers contingent business interruption protection, said Chris Parker, political violence kidnap and ransom underwriter, political accident and contingency, at Beazley P.L.C. in London. “We’re seeing an awful lot of inquiries for that and clients buying that cover.”

A traditional stand-alone property terrorism policy has a physical damage trigger, but loss of attraction coverage for lost income/revenue may be related to causes such as a lack of access without damage to a policyholder’s property, Mr. Parker said. “Clients are seeing that as the area where they can have potentially more exposure than a terrorism attack directed at them,” he said.

The shift in attacks has also attracted a wider variety of insurance buyers, said Ben Tucker, head of U.S. terrorism and political violence insurance for XL Group Ltd. in New York. “We would not have expected to see churches and schools two years ago, but we’re seeing lots of those types of occupancies today,” he said.

Such clients may be interested in more recently introduced coverages, such as active assailant coverage, but buy a package that also includes stand-alone property terrorism coverage, Mr. Tucker said. “When we looked at the actual numbers recently, about 75% of the active assailant policies we write are as a sublimit to a terrorism policy,” he said.

In early September, Hiscox Ltd. released its R5 package of terrorism insurance coverage.

“If someone comes to us and wants traditional terrorism and sabotage, we will give them a quote for that and can also include an option to add on active shooter or nuclear” or another coverage, said Jennifer Rubin, vice president for war, terrorism and political violence for Hiscox in New York. Customers are biting, “especially the active shooter component,” she said. “The terrorism product end market has evolved as a result of the activity that we’ve seen with attacks in the past couple of years,” Ms. Rubin said, adding that submissions are up 20% over this time last year.

Capacity in the stand-alone terrorism insurance market tops out at about $4 billion per risk, sources say. However, capacity is more limited for significant exposures in tier 1 cities such as New York, Chicago and San Francisco, mainly due to risk concentration concerns.

“People throw around numbers between $3.5 billion and $4 billion of global (sabotage and terrorism) market capacity,” said Mark Leverick, U.S. property terrorism leader for Aon Risk Solutions in New York.

The maximum capacity available for New York City was long thought to be around $1 billion, but it appears to have risen.

“We just went through an exercise in New York to try to put together the maximum amount of capacity on a specific project, and the market topped out at about $1.5 billion,” Willis Towers Watson’s Ms. Peters said.

Pricing for terrorism coverage may see increases, sources say. Record industry catastrophe losses, estimated by Swiss Re Ltd. to be in excess of $130 billion for 2017, may lead to some firming even in markets without losses, possibly including terrorism.

“All insurance companies evaluate their pricing based on their current book of business and spread increases over multiple lines.

Terrorism may be caught in that overall uplift effort,” said Tarique Nageer, terrorism placement and advisory practice leader for Marsh USA Inc. in New York.