Ironshore explains the growing trends of terrorism cover

It’s not an easy market for brokers, says global head, as incidents continue to grab the news

Ironshore explains the growing trends of terrorism cover

Risk Management News

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Global terrorist activity is an alarming feature of modern society. Our media is awash with news of political skirmishes and terror attacks – the most recent being in Barcelona and Finland, just last week. The character of recent attacks appears to be a terrorist focus on achieving media impact by killing innocent civilians rather than focusing on major economic impact.

Such social instability has nurtured a highly competitive market for terrorism risk insurance worldwide. Canada’s current National Terrorism Threat Level is medium, meaning that a violent act of terrorism could occur at any time.

The uptake of terrorism insurance has increased internationally as the product has become more affordable, according to Quentin Prebble, global head of terrorism at Ironshore. Coverage conditions have broadened to include things like active shooter, threat, non-damage business interruption, limited cyber and denial of access cover.

Search and compare product listings for insurance against War and Terrorism from specialty market providers here

There has also been an increased uptake of political violence coverage as opposed to the more limited conditions of a ‘stand alone’ terrorism policy. But there are some challenges in the terrorism risk insurance market.

“The main area where there continues to be a coverage shortfall is in the area of nuclear, chemical and biological coverage,” Prebble told Insurance Business. “This is largely the result of there being a very limited reinsurance market for these exposures. The management of the accumulation of risk in urban areas from these exposures in particular remains problematic for insurers.”

There are other difficulties for insurers and brokers in the terrorism insurance space. Reduced pricing and broader coverage, coupled with an increased frequency of loss/incidents have decreased margins significantly, according to Prebble. For brokers, the reductions in pricing have made terrorism risk cover easier to sell but retention of business has become more challenging.

The industry also has to navigate the issue of changing terrorism trends. In the past few years, the media has reported on multiple vehicle attacks involving civilians, a trend that is likely to continue according to Prebble.

“In addition to the increase in the incidence vehicle attacks there is the realistic possibility that drones will feature in attacks in the future. Effective geo-fencing at airports and where there are large gatherings of spectators in particular will be increasingly important in the future,” he said.


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