Terrorism Review Explores the Scope and Cover Offered by Insurance Schemes around the World
London, UK, June 12, 2013 – Several of the world’s long-established terrorism insurance schemes were set up
to deal with a different terrorism threat than is predominant today, according to a new technical guide produced by Airmic, the UK risk management association, in collaboration with Willis
Group Holdings (NYSE: WSH), the global risk adviser, insurance and reinsurance broker.
“In general, long-established terrorism schemes were created to meet the challenges of domestic and/or separatist terrorism activity,”
according to the report. “As an example, the UK’s scheme, Pool Re, was initially established to
provide insurance for IRA losses not covered by the insurance market. Rates were subsequently reduced as
the peace process progressed, but threats from other sources are now the major consideration that influences
“Globally speaking, the terrorism threat is complex, nuanced and constantly evolving,” said James Borrie, Executive Director in
Willis’ Terrorism and Political Violence Practice, and a lead author of the report. “Exposure to terrorism
inspired by domestic separatism may have lessened in certain parts of the world. But the risk
of ‘lone wolf’ violent extremists – such as the horrific Woolwich terrorist attack – represents a
very different sort of threat.”
“A large number of countries have terrorism insurance schemes and many of them were formed in response
to the events of September 11, 2001,” continued Borrie. “What this report highlights is that not
all terrorism schemes offer identical coverage. Each scheme will have different terms and conditions with varying
definitions of terrorism and different exclusions. This makes the design of a truly comprehensive global terrorism
insurance policy very complex, requiring specialist professional advice.”
Another potential issue for commercial insurance buyers is the range of weapons that terrorist could potentially bring
to bear and the impact this could have. The use of chemical weapons, for example, could
result in losses associated with infectious and contagious diseases and loss of access due to action
by regulatory authorities. There could also be product recalls as a result of contamination, resulting in
claims under all risks property damage/business interruption policies.
“Given all these factors, it is important that insurance buyers understand the scope of coverage that is
offered and whether it is sufficient for their needs. In addition, insurance buyers should be aware
of typical exclusions,” commented Borrie.
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Airmic represents UK-based risk managers and corporate insurance buyers. It has more than 1,000 members
covering nearly 500 companies, including two thirds of those in the FTSE 100.