Willis conference reveals low insurance spend on terrorism and related classes
Despite a number of recent terrorist attacks occurring on Middle East and North African soil, the take-up of terrorism insurance by companies in the region is still extremely low.
Talking to 200 insurers, brokers and reinsurers at a break-out session at GAIF’s 27th general conference, guest speaker David James, a senior underwriter from Ascot’s terrorism & political risks insurance practice, has given a presentation entitled, “Region at Risk? The Evolution of Terrorism Insurance in the Middle East”.
Focusing on the paradox of the incidence of terrorist attacks in the region and the relatively low insurance spend on this class of business, James says, “Over 23% (numerically) of terrorist attacks occur in the Middle East and North Africa, however this region accounts for only 4% premium spend in Ascot’s total terror portfolio. This is in stark contrast to North America, the biggest buyer of terrorism insurance, who accounts for some 26% of Ascot’s terror portfolio, despite a relatively small number (1.2%) of terrorist attacks.”
James explains that the volume of terrorism cover being purchased in the Middle East is however increasing largely due to massive investment in the region which fuels a desire by companies to fulfil lenders’ requirements, which usually stipulate comprehensive cover to include terrorism cover.
“There is a growing need for local insurers to provide terrorism cover, but it seems that many avoid writing this class of business as it is does not form part of their traditional book and they do not have reinsurance treaty protection in place. The Lloyd’s market however has significant specialist expertise and skills in this niche area to partner with local insurers on tailored solutions for Middle Eastern companies.”
Commenting on the significant growth of this class of business globally, Alex Clayton, Willis Global Markets terrorism practice leader says, “Since 9/11, the terrorism insurance market has undergone a rapid evolution with market capacity increasing from $50 million in 2001 to around $1.4 billion today. As a result of this evolution, terrorism cover has become more attractive in price and broader in coverage with wordings being tailored directly to the needs of our clients. Our aim today is to bring insurers up to speed on these latest developments and to commit to working together to offer market-leading solutions to our clients in the Middle East.”