Marsh issued a call to Congress today to reauthorize the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA). Otherwise, fewer insurers may offer terrorism insurance and prices potentially could increase, the company said.
The comments came out of the firm’s 2013 Terrorism Risk Insurance Report, which cited the recent bombing at the Boston Marathon “as a stark reminder that mass violence, whether a result of terrorism or other acts, remains a critical threat for organizations.”
The report comes as Congress is preparing to debate TRIPRA.
The number of companies purchasing property terrorism coverage has remained fairly constant, in the low 60 percent range, since 2009 as insurers underwrite the risk backed by TRIPRA, according to Marsh’s benchmarking data. Premium rates have also remained generally stable for terrorism coverage, the report found.
“Clearly the demand for terrorism risk insurance remains strong and the existence of the federal program plays a major part in the availability and affordability of the coverage,” said Dan Glaser, president and CEO of Marsh & McLennan Companies (MMC), who spoke today at an event sponsored by MMC and the Coalition to Insure Against Terrorism.
Construction companies paid the most of any sector for terrorism insurance, with a median rate of $63 per million of total insured value in 2012, up from $54 per million in 2010, according to Marsh. Companies in the food and beverage, health care and education sectors paid the least for coverage, with median rates of less than $20 per million.
Larger companies are more likely to purchase property terrorism insurance, and also to see the lowest cost as a percentage of overall property premiums. More companies in the Northeast (77 percent) purchased property terrorism insurance than in any other region. The West saw the lowest take-up rate (53 percent in 2012). Companies in the Midwest paid the lowest rates on average for property terrorism insurance in 2012, followed closely by companies in the West.
TRIPRA has been extended twice since originally being enacted in November 2002 as a response to the attacks of September 11, 2001.
The Marsh report, a survey of nearly 2,600 companies, is the only analysis of its kind in the US market for terrorism risk insurance coverage. This is the third edition of the report.
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