The threat of terrorism is putting pressure on the reinsurance market
The number of terrorist attacks peaked at more than 14,400 in 2006 and over the past five years there has only been a slight decrease in the frequency of terrorist events.
While recorded incidents of terror remain at historically high levels the reinsurance industry continues to meet demands for terrorism risk transfer.
However according to a recent report by Guy Carpenter & Company the re/insurance industry remains vulnerable to a major terrorism loss as a major market-moving event could quickly shift the current supply/demand dynamic.
“Although the nature of the threat is very different today from what it was ten years ago, terrorism remains a constant and serious threat. It is forever evolving as terrorist groups and individuals adapt their tactics to counter-terrorism measures and global events,” said David Flandro, Global Head of Business Intelligence at Guy Carpenter.
Given the recent attacks in Norway, riots in London, the debt crisis and political instability across Europe, terrorism and civil unrest represent very real threats for risk managers.
“The dynamic nature of terrorism, and the uncertainty in identifying the targets and frequency of attacks, requires a different approach to risk management and thus a different approach to transferring risk to the reinsurance market,” said Paul Knutson, Head of Terror Risk Specialty at Guy Carpenter.
Click here to download the full report
