Number of captives accessing TRIPRA increased 10% in 2018
The number of captives managed by Marsh actively underwriting one or more insurance programmes that access the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) increased 10 percent to 182 in 2018.
This is according to Marsh's 2019 Terrorism Risk Insurance Report, that suggested captive owners have found that the total cost of implementing terrorism insurance porgramme compares favourably to the cost of buying from the commrecial market. One of the benefits of captives is that they are seen to be able to provide broader coverage than commercial insurance policies, which can restrict coverage for NBCR events, contingent time-element losses and cyber terrorism.
The report also highlighted that while there is continued stability in the US property terrorism insurance market, this could change when TRIPRA is set to expire in 2020, and is not renewed.
Should congress allow TRIPRA to expire without a replacement, Marsh suggested it could create capacity shortfalls, especially for businesses located in high profile cities and employers with significant workers’ compensation accumulations.
“The existence of government backstops, like TRIPRA, has played an important role in ensuring the continued stability and health of the global property terrorism insurance market,” said Tarique Nageer, Terrorism Placement Advisory Leader, Marsh. “TRIPRA is in place until December 31, 2020, and all eyes are on the Congressional schedule as we approach this deadline.
“In the meantime, US businesses and organisations are advised to work with their brokers as soon as possible to map out a strategy to mitigate potential disruption.”
The report also found that the predominant terrorism threat globally remains from extremists focused on inflicting mass casualties in unsophisticated attacks on crowded public spaces rather than large-scale property damage. The terrorism insurance market has expanded coverage in response, notably in the dvelopment of coverage for active assailant events and non-damage business interruption.
Other findings from the report include that from May 2018 through May 2019, terrorism risk ratings fell across 116 countries, most notably in Egypt, Turkey, and Spain. Little improvement, however, occurred in the world’s riskiest states for terrorism, including Afghanistan, Yemen, and Iraq.