CRO briefing – Terrorism
Global Terrorism is a unique challenge for society and the insurance industry.
Terrorism is a highly complex man-made phenomenon with repercussions for society and the economy. It has developed into a threat that knows no geographic or geopolitical boundaries.
Global and local terrorist are working with great determination to increase the scale and severity of their attacks. Terrorism experts and intelligence officials believe that a future attack using nuclear, biological, chemical or radiological agents (NBCR) is only a matter of time. The potential losses in such an event would involve multiple lines of insurance and could far exceed the financial capacity of the insurance industry. In addition, such a large-scale attack could adversely affect capital markets, vastly diminishing (re)insurers’ assets – precisely when they are most needed.
The challenge of developing an adequate solution to terrorism insurance must be met – the price of failure to society and the economy is simply too high. Managing the risk of 21st century global terrorism – notably major coordinated conventional and NBCR attacks – will require a concerted effort based on a strong partnership between the insurance industry and national governments. It is time to work hand in hand to develop effective and sustainable risk management concepts and to ensure that the necessary legislative framework is permanently in place.
As important representatives of the risk community, the Chief Risk Officers of major (re)insurance companies have decided to address the challenge of terrorism within the CRO Forum’s Emerging Risks Initiative and, by communicating their view on terrorism, to enter into dialogue with major stakeholders. The new position paper also contains a comprehensive overview of terrorism coverage offered in the majority of cases by property, liability, workers’ compensation, life and health insurers in the context of pool or backstop solutions in individual countries.
CRO briefing
This study is non-binding and for reference purposes only.
Terrorism - A unique challenge for the insurance industry
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