No doubt there’s a certain satisfaction when the marketplace predictions we make in October start proving right in February. But it’s hard to celebrate when those predictions called for rising prices for our clients. That’s what we predicted in the volatile areas of terrorism and political risk, and that remains our expectation for North America in 2014.
My colleague John Lavelle, head of political and credit risk, North America, for Willis Financial Solutions, recently teamed up with me on a short WillisTV video outlining where we see rates going in 2014—and why.
I see stand-alone terrorism rates going up 10%, while embedded terrorism insurance, the coverage that is backstopped by the U.S. government through TRIA, could go through the roof with looming possibility of TRIA not being renewed at the end of 2014.
In political risk, John notes that we’re see rising demand for coverage in places of varying amounts of political instability, from the Middle East to Brazil, China and Russia. Couple that with limited capacity, and you’ve got the key ingredients for rising rates.
For more, including suggestions on what to do about these risk management challenges, check out our brief video here. We also suggest you revisit the 2014 line-by-line predictions in our fall issue of Marketplace Realities.