After the Islamic State took credit for the multipronged attacks in Paris and Beirut, many travelers have expressed a renewed interest in travel insurance policies that include an endorsement for acts of terrorism.
Commercial brokers, however, may not see a similar spike in demand. Although Islamic State militants have continued in their explosive rhetoric by issuing a new threat against Washington, DC, experts in the field report that most Canadian organizations already have safeguards in place against such dangers.
“Since the attacks, I haven’t had any further inquiries from any Canadian entities,” said James Gregory, regional director,
Aon Crisis Management. “The phone has not been ringing off the hook.”
Gregory, who specializes in Terrorism, Political Risk, Kidnap and Ransom and Product Recall, attributes the muted appetite to the stated objectives of the Islamic State violence.
“If you think about the recent attacks in Paris, the impact that they have on insurance is relatively low because the targets were not buildings and property, they were people,” he said. “The reality is that the goal of the terrorist attacks in Paris was to cause fear and upset other nations, as opposed to cause a significant amount of material damage to property.”
Moreover, he acknowledges that in many high-risk regions such as Lebanon, Afghanistan and Iraq, terrorism insurance is already expensive and capacity is limited. In addition, this is likely to be a decision that many companies have already been forced to address prior to the recent string of terrorist incidents abroad.
“If you’re a Canadian company and you’re operating in hostile parts of the world, this isn’t something you haven’t thought about already,” Gregory said.
Gregory believes that business groups will likely take other precautions, such as increasing security measures for their overseas operations. But due to the “random nature” of the acts, which makes them difficult to insure, interest in terrorism insurance is likely to remain static.
“It will change people’s attitudes but there won’t necessarily be a snap rush to purchase coverage,” he said.
