TRIPRA key to terrorism cover — Marsh

The demand for terrorism insurance remains high and the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) plays a key role in making coverage available and affordable says Marsh.

The firm’s 2014 Terrorism Risk Insurance Report, released today, finds the number of companies purchasing terrorism insurance has remained constant - in the mid-60% range - since 2009 and pricing has also generally remained stable.

Uncertainty over TRIPRA’s pending expiration at the end of the year, however, is currently affecting the availability and price of terrorism coverage in the US, especially as it relates to workers’ compensation.

The report’s findings were presented today at a roundtable discussion at the US Capitol, which brought together industry experts, clients and policy makers.

Marsh chief executive and president of Marsh and McLennan Dan Glaser, who chaired the roundtable, said: “We believe TRIPRA is a model public-private partnership. Marsh’s new report confirms there is strong, long-term demand for the insurance it backstops with more than six out of 10 companies in the survey purchasing coverage.
“The existence of the federal program plays a major part in the availability and affordability of the coverage.”

Key findings from the report include:

•  in 2013, the percentage of Marsh clients purchasing terrorism coverage was 62%, unchanged from 2012;
• education organisations purchased property terrorism insurance at a higher rate, 81%, than did those in any other industry segment in 2013. Health care organisations, financial institutions, and media companies had the next highest take-up rates among the 17 industry segments surveyed, all more than 70%.
• Massachusetts had the highest property terrorism insurance take-up rates (84%) among all states in 2013, followed by Maryland at 81%. Hawaii had the lowest take-up rate, at 36%;
• median rates for companies with total insured value (TIV) of less than $100m (€72.2m) rose slightly in 2013 to $51(€36.8) per million from $49 (€35.4)per million of TIV, while median rates for companies with TIVs of more than $1bn (€720m), fell slightly to $18 (€13.1) per million from $19 (€13.7) per million in 2013;
• construction companies paid the most for terrorism insurance in 2013, a median rate of $66 (€47) per million TIV, followed by power and utility companies, which paid a median rate of $48 (€34.7)per million of TIV; and
• health care companies paid the least for terrorism insurance in 2013, a median rate of $14 (€10.12) per million of TIV, following by education and manufacturing companies, which each paid a median $17 (€12.29 )per million of TIV.