At RIMS last week, my Willis colleague Colleen McCarthy caught up to me at the Willis booth to learn more about the terrorism insurance landscape. Here’s an overview of our conversation, with the video of it below. (You can also view it on YouTube.)
Terrorist Risk Itself Is Evolving
When you think of terrorism, what comes to most peoples’ minds is what the insurance industry refers to as “conventional” terrorism: bombings and the like. As the years pass since 9/11, the tactics of terrorists have evolved and there is new focus on more sophisticated methods of attack, including the use of biological, chemical and radioactive agents—and the potentially crippling consequences of a cyber-attack. With the expansion of global information networks worldwide, and development of increasingly sophisticated malware, terrorist organizations are increasingly capable of paralyzing otherwise secure sites anywhere on the globe.
And Terrorism Insurance is a Big Question Mark
The most pressing question about terrorism insurance at the moment is whether the U.S. government will allow the Terrorism Risk Insurance Act (TRIA) to expire in 2014. (See my last post, “Life After TRIA,” for more on that.) At RIMS, I participated in a panel that discussed the critical role TRIA has served in creating insurance market stability over the past 10 years and the prospects for the future. It is becoming more apparent that a third extension of the program is on uncertain ground. Early preparation for the potential consequences of a curtailment or non-renewal of this backstop will be critical.