Terrorism Risk Spurs Coverage Demand: Marsh

Premium rates stabilize, says report.

Demand is high for terrorism insurance across all industries in the U.S., reports Marsh.

Over half –60%–of respondents to the insurance broker’s latest survey bought property terrorism insurance in 2009, according to the Marsh Risk Report: Terrorism Risk Insurance. That figure is more than double the 23% of businesses who bought the same coverage in 2003.

Certain sectors–utilities, real estate, health care, transportation, financial institutions, and media companies–led the way in take-up, with take-up rates topping 70%.

Financial institutions (24%) and transportation companies (17%) paid the highest percentage of total property premiums; while hospitality firms saw the greatest decrease in this area, a drop from 13% to 4%.

Rates stabilize

But premium rates have stabilized in recent years, with the median premium rates falling from $37 per million of total insured value (TIV) in 2009 to $25 per million in 2009.

Construction, hospitality, utility, and real estate businesses saw higher median premium rates–over $50 per million of TIV.

“Terrorism risk remains a critical concern for global companies,” Ben Tucker, a senior vice president in Marsh’s Property Practice and one of the report’s lead authors, said in releasing the findings.

Capacity in the standalone terrorism insurance market has also grown, the report notes, citing the hospitality industry, large real estate firms and financial institutions among key buyers.

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