Forty-five percent of surveyed risk professionals expect a decrease in terrorism coverage limits and 24 percent said they believe coverage would no longer be offered by insurers upon expiration of the Terrorism Risk Insurance Act (TRIA), according to a new survey from RIMS, the risk management society.
When asked how they have responded when facing difficulty in obtaining full terrorism coverage, 37.0 percent said they go without terrorism insurance, 32.9 percent accept a limited amount of terrorism insurance, 15.1 percent support establishing a captive, and another 15.1 percent work with carriers to obtain coverage at a higher price.
“It’s clear that risk professionals are concerned that TRIA’s expiration will prevent their organizations from attaining the necessary coverage to protect assets and employees from devastation caused by terrorism,” said Carolyn Snow, RIMS board director.
Because of TRIA’s looming expiration date, insurers and consumers are preparing and considering alternatives. Within the last 18 months, more than two-thirds of respondents (67.1 percent) have been required to submit information to an insurer on the concentration of employees within a single location. This is by far most common among workers’ comp insurers; of the respondents who have had to submit information, 79.1 percent of them submitted to a workers’ comp insurer, 28 percent to a general liability insurer and 11.4 percent to a property insurer.
Nevertheless, 94.4 percent have not been declined workers’ comp coverage because of a high concentration of employees in a certain area 14 respondents had.
As it stands, the vast majority (66.0 percent) of respondents do not use stand-alone terrorism coverage, while an even larger majority (74.8 percent) do not use any terrorism risk alternatives, such as captives (17.4 percent), reinsurance (14.3 percent) or catastrophe bonds (0.4 percent).
For more on TRIA, read A.M. Best’s advice for insurer’s preparing for its expiration.
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