Insurers playing catch up on terrorism coverageReprints
The insurance and reinsurance market has been slow to respond to the need for new products to address terrorism risks' growing threat, although progress is being made, says a report issued Thursday in London by Jardine Lloyd Thompson Group P.L.C. units JLT Re and JLT Specialty Ltd.
Pointing to the Brussels terrorist attacks among other incidents, “JLT Re Viewpoint: Rising to the New Terror Challenge” says, “The nature of the terrorism threat has clearly changed, but the (insurance and reinsurance) market has been slow to respond and the financial fallout from several recent attacks has reinforced the need for new products.”
“Although most existing terrorism policies are designed to respond to events that cause significant property losses, property damage is no longer the primary loss driver,” says the report.
“Indeed, the disparity between the highly economic impacts of some recent attacks and the decreasing amounts being covered by insurance is a worrying trend, and one which risk carriers must address quickly if they are to remain relevant to clients,” says the report.
However, says the report, “Progress has been made in some areas, as insurers have begun to respond to calls for businesses to provide more clarity and wider terms to existing products, and on physical damage business interruption in particular.”
The report concludes that the optimal solution would be for the stand-alone market “to focus on protecting against a range of impacts that reflect today's terrorism environment” and create new products that provide comprehensive protection against all risks, including property damage; chemical, biological radiological and nuclear risks; business interruption; impacts on people; nonphysical damage business interruption; cyber, including business interruption and cyber extortion; and damage to brand and reputation.