Page 48 - WTW Asia Insurance Market Report
P. 48

Terrorism and Political Violence

The market in 2016 remained competitive, with rates moving downwards
primarily due to new capacity entering the region. Singapore continues to act
as the hub for terrorism and political violence insurance in the region, with an
estimated maximum capacity of USD 2.5 billion – a significant increase from
previous years. There has also been deployment of experienced resources
from established markets such as London into the region.

Terrorism insurance offers favourable loss ratios to insurers.  Cyber Coverage is highly specific to each policy, with
Due to falling premiums in other product lines, insurers have   little standardisation across insurers. Typically, coverage
an increased business interest to write terrorism insurance.    includes indemnification for losses arising from a data
Rates have fallen between 15% and 25% depending on              breach, business interruption, and cyber-extortion, among
the country, driving underwriters and brokers to add value      others. Insurers are faced with a number of challenges as
to clients by offering new products and services to stem        the pace of cyber-crime is quickly evolving and past data is
the loss of revenue. Falling rates will drive more product      unlikely to provide an insight into the future. As the demand
innovation, client awareness and understanding.                 for comprehensive cyber-risk solutions exceeds supply,
                                                                insurers are adapting to the dynamic nature of technology in
In the coming year, there is an expectation of further          order to overcome difficulties in pricing and underwriting that
increases in total available capacity, lower rates, an          have constrained their ability to fully penetrate the market.
increase in product development and innovation, and
the introduction of wider wordings to maintain premium.         A.L.T (Active Assailant, Loss of Attraction, Threat)
Enquiries from countries such as Myanmar and Vietnam,           Active Assailant covers property damage / business
which are countries that did not traditionally buy such         interruption and extra expenses following a premeditated
insurance, are also expected to increase.                       malicious physical attack by a person armed with a weapon.

In response to market trends, a new suite of hybrid             Loss of Attraction covers any business interruption caused
products have been created to address the changing              when a terrorism event occurs at a location within 1km of the
profile of terrorism. We have seen an increase in popularity    Insured’s premises or at a pre-specified attraction property,
of these products, such as:                                     without any property damage to the Insured’s premises.

Property Damage and Business Interruption covers                Threat is a policy triggered when there is a threat of a
physical assets and consequential business interruption         malicious act to either physically damage the Insured’s
following a property damage loss.                               property or cause bodily injury to directors, officers,
                                                                employees of the Insured at an insured location. It includes
Impairment of Access is a product exclusive to Willis           any malicious act, not just the threat of terrorism.
Towers Watson. It offers comprehensive Gross Earnings
cover, with or without a property damage trigger, where         “The Terrorism Insurance market has
the Insured’s operations have been impaired. Coverage           become more sophisticated – Risk
triggers include Terrorism (and the threat of Terrorism),       Engineering and Assessments are
Sabotage, SRCC, Malicious Damage, Protestors and Order          increasingly offered to large clients
of Civil or Military Authority. The minimum deductible is 3     to find products better suited to their
hours per occurrence.                                           business needs”

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