Terrorism – the ongoing threat
The horrific terrorist attack on 11 September 2001 wrought previously inconceivable damage. The attacks in Istanbul in 2004, Madrid in 2004 and London in 2005 made it all too clear that the threat of international terrorism remains.
Political, economic and social developments have combined to thrust terrorism into the international spotlight. What was once predominantly a national concern has now become an international threat. In view of the growing concentration of wealth in economic centres around the world, terrorists can cause damage of staggering dimensions. Besides these geopolitical factors, terrorist organisations have greater access to powerful weapons. These issues are faced by both insurers and insureds.
Insurability
While parameters have changed, terrorism is, nonetheless, an insurable risk provided that limits and coverage are clear and premiums are commensurate with the new dimension of this risk.
Are governments the insurer of last resort?
The risk-bearing community comprising insureds, insurers and governments must reach agreement on state involvement in this risk. As a whole, the insurance industry (including reinsurance) can not make sufficient capital available to offer policyholders protection for some of the potentially enormous terrorist attacks currently under examination by terrorism specialists. Without state involvement, extremely large losses may be underinsured.
The way forward through dialogue
As a premier global insurer, Swiss Re has both the expertise and capital strength to offer innovative solutions for this new challenge. Swiss Re is actively committed to promoting the risk dialogue and developing existing and new solutions.
“We see public/private partnerships as the answer for insuring against large terrorism exposures. All stakeholders then bear a portion of risk according to their financial capacity.”
Brian Gray
Head Property & Specialty
Member of the Executive Board
Related links
Roger Ferguson presents case for permanent terrorism solution
